often do not match the received power authorizations. There is no coordinating body
that establishes horizontal links between enterprises in the field of innovation, although
there is vertical coordination (from institutions to ministries and government) [4].
One of the most important indicators of the innovation sphere is the share of
innovative enterprises. The dynamics of this indicator in Ukraine is shown at Figure 2.
[6]
Figure 2. – Share of innovative firms in Ukraine at 1995-2017 [6]
Only 16% of Ukrainian enterprises were innovate at 2017, placing Ukraine at the
bottom of the comparator group of EU new member States. However, Ukraine
compares much more favourably in terms of the proportion of SMEs innovating in-
house, with a higher share than in a number of EU new member States. Innovation
surveys show a lower frequency of innovation among small firms, particularly in
comparison to large enterprises. However, this gap is small in the case of Ukraine, with
18.4% of SMEs innovating in-house compared to 21% innovative enterprises at the
aggregate level. The main reason of this is that large Ukrainian firms are actually
lagging more in terms of frequency of innovations than SMEs. While the cause of this
is not clear, it may be related to the delayed process of privatization and/or delayed
restructuring.
For comparison, we note that more than 50% of enterprises in the EU (28
countries) carried out innovation activities during 2012-2014. The largest enterprises
with more than 250 employees are the most active in this field. 75% of such firms were
innovative during 2012-2014 [7].
The majority of Ukrainian firms, like most firms in other countries with
economies in transition, operate “behind the technology frontier” [7]. Innovation
activities in countries behind the technology frontier, such as Ukraine, focus mainly on
the adaptation of machinery, equipment and software. The share of expenditure on
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