TheMarketForIdeas

An analysis of the declared strategies and the current economic model of Ukraine indicates that the outdated socio-economic and political paradigm is a key issue that prevents the country from reaching the horizons of balanced development and is reducing Ukraine to the level of a raw material appendage to the developed countries.

The systematic analysis of socioeconomic processes conducted by leading experts and research universities revealed six major inhibitory factors. Their elimination will create preconditions for an ambitious leap of Ukraine.

1. Losses up to 25% of GDP from military operations in the East of Ukraine and the occupation of Crimea;
2. The level of the shadow economy is at least 35% of the GDP, but according to expert assessments, the share of shadow sector in the national economy is at 50-52%;
3. The extent of corruption has reached 14% of GDP caused by the shadow economy;
4. More than 13% of GDP supports an inadequate, outdated pension system, which causes significant negative pressure on the national economy;
5. The public debt costs almost 10% of GDP ($ 9 billion) annually;
6. The energy costs exceed 3-5 times the level of developed countries. 

Solutions 

A significant reduction in the impact of these critical inhibitory factors is reflected in the government anti-crisis program, the first steps of which are the adopting strategic decisions in three key areas:

First, effective responses and preventive measures for risks due to inefficiencies in public administration:

• The inaccessibility of financial and investment resources - ineffective existing credit mechanism;
• The critical scale and rate of loss of human and social capital – ineffective and unfair distribution of national wealth;
• The inadequacy of public administration to meet the expectations of society - the lack of public control and participation.

Second, the adaptation to the changes in demand for high-tech products in the global economy along with stimulating the development of the domestic market.

Third, the creation and development of high value-added manufacturing in the national economy.

Prospective sectors of the economy require significant investments in technological modernization to increase the productivity and efficiency of enterprises. 

Some ideas 

The outdated socio-economic and political paradigm is a key issue that prevents the country from reaching the horizons of balanced development and is reducing Ukraine to the level of a raw material appendage to the developed countries.

The key content of the Doctrine “Ukraine 2030” is a sustainable development model. About 50 leading Ukrainian universities were involved in work on the mechanisms of implementation of the future development of Ukraine.

The doctrine identifies human capital as the main treasure and key potential of Ukraine’s development. Investing in people presupposes investment in science, culture, education and health, so the state can build a high-tech national economy and provide sustainable, balanced and inclusive growth.

The summary of the sustainable development model of Ukraine is as follows:

1. Historically, the management of an economy deals with the processes of production, distribution, exchange and consumption. The balance is regulated by an economic policy, which is determined by the traditions and culture of management in society.
2. The modern development of the most advanced societies is based on the principles of smart growth (commercialization of knowledge and innovations), balanced growth (efficient and economical use of resources, development of an ecological and competitive economy) and inclusive growth (attraction, inclusiveness, activation of creative potential and expansion of economic opportunities).
3. The introduction of these principles requires the simultaneous development of the following mechanisms (in the model indicated in circles):

• Mechanism No. 1: Human Capital - Effective Implementation and Development;
• Mechanism No. 2: A Social Contract - Defining the framework rules and responsibilities of all strata of the Ukrainian community in order to reach consensus between government, business and civil society;
• Mechanism No. 3: Good Governance - A new paradigm of public administration as a service. Citizens are users of services and government officials are managers. Changing the management paradigm consists of changing the communication process between government and society;
• Mechanism No. 4: Networking and economic clusters. The ability of the country to benefit from this by participating in the worldwide networks of production and trade depends on its involvement in the value-added chain of networking;
• Mechanism No. 5: Stimulation of economic activity and development of internal market - involves institutional and structural changes aimed at creating a competitive environment, the anti-shadowing of economic activity, the development of the domestic markets and the selective support of unique innovation sectors (that generate a high added value). It supposes the activation of entrepreneurial potential to micro (households), meso (small and medium enterprises) and macro (big business) levels;
• Mechanism No. 6: The development of a creative economy based on the capitalization of talent, intellectual potential and the implementation of new ideas. The creative approach, combined with accelerated economic development based on ITC, is able to accelerate the creation of strategic capacities within the national economy and provide a catalyst for its modernization and the creation of a new high-tech economy;
• Mechanism No. 7: The financial support of sustainable development enables a fair distribution of national wealth and a reasonable use of the results of economic activity. The consistent and integrated development of all components of the financial system of Ukraine will enable the creation of a powerful financial and investment cluster across the country;
• Mechanism No. 8: The full functioning of the financial system is ensured by a mechanism of stable investment security. It guarantees the inflow of foreign direct investment into the national economy. Each dollar invested in Ukraine should be directly or indirectly an investment in a citizen of Ukraine: an increase in his/her welfare, health, safety and happiness.

The key content of the Doctrine “Ukraine 2030” is a sustainable development model. About 50 leading Ukrainian universities were involved in work on the mechanisms of implementation of the future development of Ukraine.

The new social contract in Ukraine should be based on the recognition that the goal of development is human happiness and well-being, and its socialization should take place in accordance with the national interests of Ukraine. It is the social treaty that implements uniform framework rules to determine the responsibility of all strata of the Ukrainian community in order to reach consensus between government, business and civil society.

The doctrine identifies human capital as the main treasure and key potential of Ukraine’s development.

The competitiveness of Ukraine in the struggle for attracting investments, business initiatives and a creative class is ensured by the introduction of the principles of smart governance in the practice of public administration. The united territorial communities are the primary link in ensuring the sound management of their land, providing social services and balanced development of the territory. Effective consolidation, cooperation and cooperation between the united territorial communities ensure social and territorial cohesion, strength, and growth of the power of the whole country. Territorial cohesion and the growth of power throughout the country should be realized through the creation of new productive ventures and the development of industrial ties between them. This will be aided by the structural modernization of the country's economy through the network principle both locally and internationally.

4. Thus, Ukraine can achieve the expected result: the social and territorial cohesion of Ukrainians leading to the development of a competitive economy. At the same time, the indicator of development is not only the GDP of 710-750 billion US dollars, but also measured by the life expectancy, the ability of citizens to receive quality education, health care; through the production of cultural and scientific products; through the security system and the protection of private and intellectual property. The precondition is that the results of joint efforts are equitably shared. 

Actions to be undertaken 

The competitiveness of Ukraine in the struggle for attracting investments, business initiatives and a creative class is ensured by the introduction of the principles of smart governance in the practice of public administration.

During 2017-2018, discussions among scientists, businessmen and the public were held in all regions of the country on how to ensure a reasonable and comprehensive development of Ukraine based on the existing potential of Ukrainian citizens, science and business. In all, about five thousand people became the direct participants of the discussions. The National Forum "Ukraine 2030" (June 2018) and its online presence is the platform for the consolidation of the intellectual community in order to develop solutions for the future of Ukraine. The Green Paper on Sustainable Development Policy was the result of consultations with stakeholders.

The intellectual community of the National Forum "Ukraine 2030" is convinced that only the consolidation of society and state institutions around the idea of a human-centric model of politics and the protection of national interests will ensure the innovative development of the Ukrainian economy.

Key actions are a priority for the economy of Ukraine to emerge from the period of stagnation:

1. To form a program of state protectionism in relation to innovative directions in the triangle science-business-education;
2. Invest in science, education and culture;
3. Priority of investing - the creation of new production chains, or integration into existing ones;
4. To introduce the key principles of modern management at all levels of both state and economic management: the definition of goals, the formulation of tasks, vision of the expected results and control of the results.

Key targets:

• Ensuring an increase in the welfare of the population;
• Reducing the gap between the rich and the poor;
• Formation of a powerful middle class.

Tasks for power structures:

• Adoption of the Ethics Code policy, the main mission of which is to serve the national interests of Ukraine;
• Strategies for 5-10-20 years ahead (Foresight analyses);
• Transfer of political decisions into the language of the interests of citizens and legitimate cooperation with different interest groups;
• Reporting and responsibility for implementation / non-fulfilment of the decisions taken;
• Readiness to perform its service functions publicly, transparently and effectively for society and the business sector.

Business objectives:

• Introduction of the Business Constitutions;
• Diminish corruption payments and shadow business;
• Invest in culture, science, education and health as key factors in the development and formation of human capital;
• Initiate publicly-funded projects under public-private partnership;
• Adhere to the principles of balanced development – the rational use of natural resources, the creation of innovative ecosystems, the equitable distribution of national wealth.

The intellectual community of the National Forum "Ukraine 2030" is convinced that only the consolidation of society and state institutions around the idea of a human-centric model of politics and the protection of national interests will ensure the innovative development of the Ukrainian economy.

Tasks for citizens:

• To have active citizenship in which they are empowered to use their own voice;
• Enforce law and control power;
• Discard informal payments and shadow revenues;
• To cultivate mutual respect, benevolence and critical thinking;
• Take responsibility for personal development;
• Respect natural resources and the living space.

The community and the Forum of “Ukraine 2030” indicates the expected results:

• The reorganization of the socio-economic and cultural outlook of society;
• The activation of small and medium business;
• The development of the domestic market.

The control over the results is carried out according to the international indexes:

• Happiness;
• Human development;
• Health;
• Welfare;
• Creativity;
• Innovation Index;
• Index of Competitiveness;
• Increase in patent activity;
• Economic freedom;
• World Governance Index;
• Ease of doing business;
• Energy Security. 

Conclusion 

Implementing these changes will, of course, be enormously challenging. It will require an increased awareness within a broader spectrum of the society of the problems and the solutions, as well as their active engagement in the policymaking process. Implementation will also benefit from the continued advice and support of policymakers and financial institutions in supportive countries. According to the new foresight scenario for Ukraine, the Doctrine offers a model of innovation development, which is already becoming the main instrument for further calculations and details the specialized development programs in Ukraine based on available human capital.