DOI: https://doi.org/10.62204/2336-498X-2023-1-9

INNOVATIVE DEVELOPMENT OF DOMESTIC BUSINESS:

A NEW VECTOR OF UKRAINE’S FOREIGN ECONOMIC STRATEGY

Roman Yankovoi,

Ph.D. in Economics, Associate Professor,

Higher Educational Institution «Academician Yuriy Bugay

International Scientific and Technical University», Ukraine

javagaz@ukr.net; ORCID: 0000-0001-5307-0991

Annotation. The article examines the innovative development of domestic business as a new vector of Ukraine’s foreign economic strategy. Key aspects such as research and development, partnerships, culture of innovation, technology implementation, continuous improvement, financing of innovations and adaptation to market changes are presented. The advantages of international cooperation for joint innovation projects and export of Ukrainian innovative products to the world market have been investigated.

Keywords: innovation, domestic business, foreign economic strategy, globalisation, investment, high-tech solutions, export, international cooperation.

Introduction. Ukraine has significant potential for innovative development, which can be a key factor in improving its foreign economic strategy. Innovative technologies and products are becoming an increasingly important catalyst for economic development, creating competitiveness and opening up new opportunities in international markets. The objective of the research is to study innovative approaches and technologies that could improve the country’s foreign economic strategy, in particular in the context of export activities and cooperation with other countries.

The study of innovative business development and foreign trade strategy is a complex topic that may include various aspects of economics, business, technology, politics, etc. Ukrainian scholars and experts who have conducted research and published on the aspects of innovation and foreign trade include: T. Mylovanov – an economist and scholar who has worked on international trade and economic reforms. He is also known for his views on innovation in the Ukrainian economy; O. Talvin, an economist who has worked on financial stability and innovative development; I. Burkovskyi, a researcher at the Centre for Economic Strategy who has frequently commented and analysed the economic situation in Ukraine; M. Zhernakov, an economist who studies microeconomic aspects of the Ukrainian economy and its innovative development; Valentyna Zhovtyak, an economist and scholar who has frequently researched Ukraine’s innovation potential and its foreign economic relations, especially   with EU countries; O. Pochkun is a digital economy specialist who often considers the integration of new technologies into the business processes of domestic companies; Y. Honcharuk – a researcher who analyses strategies for the development of small and medium-sized businesses in Ukraine, in particular in the context of innovation and foreign trade; О. Minich is an expert in the field of foreign economic policy who actively studies the impact of global trends on the innovative development of Ukraine; A. Dligach – a researcher who focuses on technological modernisation and innovative activity of Ukrainian enterprises; T. Vyshnevskyi – a scientist who is actively engaged in the analysis of economic reforms, their impact on innovative development and international economic relations of Ukraine.

These scientists and experts represent only a part of the academic community of Ukraine that studies the issues of innovation development and foreign economic strategy. There is a significant number of other specialists who make a significant contribution to the development within this field.

Research results. Innovative development of domestic business is the process of introducing new ideas, technologies, products or services that help businesses grow, develop and remain competitive in the market. Innovation can relate to various aspects of business, including processes, products, marketing, administration and technology. Here are some key aspects of innovative development of domestic business.

1. The state of the innovation sector in Ukraine. The state of the innovation sector in Ukraine, as in many other countries, is dynamic and depends on numerous factors, such as political stability, economic development, investment and global trends. Ukraine has become one of the key countries in Europe in terms of IT development. Cities such as Kyiv, Lviv, Kharkiv and others have become centres for the development of IT start-ups and outsourcing companies. This is driven by a highly skilled workforce, an eastern time zone that is convenient for cooperation with Western Europe and the US, and competitive service prices. Ukraine’s innovation sector has produced a number of successful start-ups that have attracted international investment and entered the global market [1-2].

Despite its potential, Ukraine’s innovation sector faces challenges that limit its development. These include insufficient investment in science and research, low commercialisation of scientific developments, bureaucratic complexity, low number of patent applications, unstable legal environment, and insufficient government support.

As a result of the study, we have systematised the areas for the development of the innovation sector in Ukraine:

− venture capital funding. Although the venture capital market in Ukraine is still developing, some venture capital funds and angel investors are actively looking for opportunities to invest in promising startups. This is a positive sign of growing confidence in the country’s innovation potential.

− talent. Ukraine’s higher education system continues to produce highly qualified specialists in technology, mathematics and natural sciences. Many young Ukrainians also support education abroad, while maintaining ties with their home country and facilitating the transfer of knowledge and skills.

− technical groups and communities. Ukraine has a vibrant community of developers, engineers and entrepreneurs that organises numerous events, workshops, hackathons and conferences to facilitate the exchange of ideas and best practices.

− start-up ecosystem. Ukraine’s major cities, especially Kyiv, Lviv and Kharkiv, are becoming really attractive to young entrepreneurs thanks to the availability of coworking spaces, accelerators and support from local organisations.

− foreign economic activity. With the signing of the Association Agreement with the European Union, Ukraine has received favourable conditions for cooperation with European partners in the field of technology and innovation.

− legislation. While some legislation is in place to support innovation, much work remains to be done to create an optimal legal environment for innovation.

− energy and green technologies. Given the global trend towards renewable energy sources, Ukraine also plans to increase the share of green energy in the overall energy mix. Investments in solar, wind and bioenergy, as well as energy efficiency projects, remain increasingly relevant.

− agTech. The agriculture sector has always been a growth area for Ukraine. Thanks to modern technologies such as IoT, drones, biotechnology and data analytics, Ukrainian farmers have the opportunity to optimise their production and make it competitive on the global market.

− biotechnology and medicine. Biotech and medical innovation start-ups are also finding their place in the market, developing new solutions for diagnostics, treatment and health maintenance.

− integration with the global market. A growing number of Ukrainian technology companies are going global and producing high quality products and services.

− support from the diaspora. The Ukrainian diaspora abroad actively supports the development of the innovation sector in Ukraine by offering mentorship, investment, and opportunities for cooperation [3-4].

To ensure the sustainable growth of the innovation sector, it is important to focus on long-term planning, attracting foreign capital, developing domestic technologies and training. despite the existing challenges, Ukraine has every chance to become a statistical leader in innovation in Europe due to its technical potential, talented specialists and strategic location.

2. The importance of innovation development for Ukraine’s foreign economic strategy. Innovative development is becoming a strategic factor in determining the country’s foreign economic strategy. Innovative products and services allow Ukrainian companies to gain a foothold in the international market, attract new investments, create an advantage in competition and help improve the country’s image on the global arena. Innovations can become a driver of economic growth, help to gain competitive advantages in world markets and improve the quality of life of the nation. Here are some of the key implications of innovation development for Ukraine’s foreign economic strategy:

− increased export potential: new technologies, goods and services can open new markets for Ukraine or increase the number of existing markets;

− attractiveness for foreign investment: innovative activities can make Ukraine more attractive to foreign investors looking for opportunities in areas with high technological potential;

− technology transfer: cooperation with foreign partners can help to introduce the latest technologies and increase the competence of local companies;

− diversification of the economy: innovation can help Ukraine broaden its economic base by reducing its dependence on traditional industries;

− increasing competitiveness: innovations can enable Ukrainian companies to become more competitive abroad by offering unique solutions or higher quality goods/services;

− support for sustainable development: innovations in the field of energy efficiency, ecology and sustainable development can contribute not only to increasing exports, but also to reducing the environmental impact of the economy [5-6].

In order to fulfil these benefits, Ukraine needs a clear strategy to support innovation, aimed at creating a favourable environment for R&D, technology commercialisation and cooperation with international partners.

3. Challenges and obstacles to innovation development. To succeed in innovation development, Ukraine needs to address a number of challenges:
4. a) Insufficient support from the government. The state should intensify support for the innovation sector by creating a favourable legal environment, investment incentives and promoting the commercialisation of scientific developments;
5. b) Insufficient investment. The government should attract investments from both domestic and external sources to stimulate scientific and technological progress and the development of innovative projects;
6. c) Development of education and research. Ukraine should intensify investments in education and research, promoting the creation of high-quality scientific personnel and research institutions;
7. d) Commercialisation of scientific developments. An important stage is the transformation of scientific developments into commercially successful products, which requires support from the state and the introduction of mechanisms to facilitate technology transfer between science and industry;
8. e) Promotion of patent activity. Ukraine needs to strengthen its patent activity to protect the intellectual property of domestic innovations and help them take their place in the global market [7] ;
9. Stimulating the innovation potential of domestic business.
10. a) Financial support. The government should provide financial support to innovative enterprises through grants, subsidies and tax incentives to attract investment and create incentives for innovation.
11. b) Promoting innovation clusters. The creation of innovation clusters will help to combine the potential of producers, researchers and investors to jointly introduce innovative ideas and products to international markets.
12. c) Attracting foreign partners. Partnerships with foreign companies and institutions will allow Ukrainian enterprises to gain access to new technologies, knowledge and resources, as well as to introduce their innovative developments in foreign markets.
13. d) Development of innovation infrastructure. An important aspect is the development of infrastructure for innovative advancement, such as technology parks, incubators and research centres, which will stimulate knowledge exchange and facilitate the commercialisation of ideas [8].
14. Promotion of Ukrainian goods and services in foreign markets.
15. a) Marketing strategy. Ukrainian enterprises need to develop an effective marketing strategy that emphasises the innovative features of their products and services and their competitive advantage in international markets.
16. b) Participation in exhibitions and conferences. Active participation in international exhibitions and conferences will help to promote Ukrainian producers of innovative goods and services, attract new customers and partners.
17. c) Cooperation with trade delegations. Enterprises should actively cooperate with state trade delegations and diplomatic missions to get support in exploring foreign markets and attracting new customers [9-10].

The issue of determining the modern vectors of Ukraine’s foreign economic strategy in the early 2020s is becoming relevant:

1. Development of export potential: promoting the growth of the export sector, expanding markets for Ukrainian goods and services, and diversifying export markets to reduce dependence on individual countries.
2. Investments and investment climate attractiveness: stimulating foreign direct investment, protecting investors, improving the business climate and unlocking the potential for attracting foreign investment.
3. Trade development: deepening trade ties with partners, learning and expanding free trade agreements, and participating in integration processes (e.g., the European Union, the World Trade Organisation, etc.).
4. Diversification of energy sources and energy resources: development of alternative energy sources, unlocking the potential of renewable energy, improving energy efficiency and reducing dependence on imports of certain energy resources.
5. Development of transport infrastructure: modernisation and development of transport infrastructure to improve connectivity and ease of trade and transport of goods.
6. Support for exporters and small enterprises: providing assistance to exporters, simplifying export procedures and supporting small and medium-sized businesses in export operations.
7. Innovations and digital technologies: support for the development of innovations and the introduction of digital technologies to increase the competitiveness of the Ukrainian economy.
8. Regional cooperation: strengthening cooperation with other countries and regional blocs to develop joint projects, reduce trade barriers and address common economic challenges [11-12].

Continuous development and improvement are key elements to ensure successful innovative development of domestic business and increase its competitiveness in international markets. The scientific novelty of the article lies in the originality of the study and general modern approaches to the topic. We propose several areas of improvement that can help Ukraine realise its potential and become an innovative leader in the world.

Development of innovation infrastructure. Ukraine needs to invest in the creation of innovative research centres, technology parks and incubators that facilitate interaction between business, science and education. Such infrastructure would create favourable conditions for the introduction of advanced technologies and ideas.

Support for innovative start-ups. The government should create special programmes and financial instruments to support innovative start-ups. Investing in promising startups can help grow successful technology companies and become a source of new ideas and solutions.

Ensure access to finance. Ukrainian companies need access to financial resources to invest in research, development and implementation of new technologies. The development of alternative sources of funding, such as venture capital and investment funds, can help facilitate this process.

Promoting an innovative educational environment. The development of innovative businesses starts with highly skilled and creative personnel. The government should ensure that the educational system is properly developed to foster the innovative abilities of students and researchers. It is also important to attract foreign experts and specialists to share knowledge and experience.

Engaging foreign partners. Collaboration with foreign partners and companies can help domestic businesses ensure technological transfer, implement best practices, and open new markets. Creating favourable conditions for foreign investors can lead to the attraction of significant capital and technological expertise.

Development of innovative industries. It is important to locate selective areas of innovative business development, such as information technology, green energy, biotechnology, medical technology, etc. Investing in this sector can help Ukraine gain a strong position in global markets and ensure the sustainability of economic development.

Innovative business development is a key factor for achieving success and competitiveness in today’s environment of rapid technological progress. The areas that support innovative business development include:

1. Research and development of new products and technologies. Investing in research and development is a key success factor in an innovative business. Companies should stimulate their research departments and collaborate with universities and research centres to create new products and technologies that will meet market needs and improve the quality of life.
2. Digital technologies and the Internet of Things. Digital technologies are currently transforming the entire business sector. The use of artificial intelligence, data analytics, cloud technologies and the Internet can help companies optimise processes, increase productivity, reduce costs and take advantage of market opportunities.
3. Green economy. Companies should look for ways to reduce their environmental footprint by implementing green technologies, energy efficiency, waste recycling, and promoting the use of renewable energy sources.
4. Improving customer experience. Given the growing expectations of consumers, innovative approaches to improving customer experience can become a competitive advantage. Personalisation, fast order processing, efficient service support and the use of social media to interact with customers can increase customer loyalty and satisfaction.
5. Developing talent and personnel. Innovative business development requires highly skilled employees with creative thinking. Companies should invest in talent development, creating favourable conditions for creativity, learning and personal growth of their employees.
6. Collaboration and partnership. Collaboration with other companies, start-ups, universities and research institutes can facilitate the exchange of knowledge, ideas and technologies. Partnerships can provide access to new markets and resources, and help create innovative solutions.

Taken together, these areas of improvement can contribute to the innovative development of domestic businesses and strengthen Ukraine’s position on the international stage. Systemic measures to support the innovation environment, aimed at creating favourable conditions for the development and implementation of advanced technologies and ideas, should be a priority.

Conclusions. Innovative development of domestic business can become a key tool in improving Ukraine’s foreign economic strategy. Accelerating the innovation potential of domestic companies, creating favourable conditions for the development of innovative ideas and products, and promoting Ukrainian goods and services on foreign markets are key areas that will help the country take its rightful place in the global economic space. By providing adequate support to the innovation sector, Ukraine will be able to fulfil its potential and strengthen its competitiveness in the international arena. However, in order to succeed, special attention needs to be paid to addressing a number of issues that currently hinder innovation development in the country.

First, the government should focus on creating a favourable legal and regulatory environment for innovative enterprises. Introducing a simplified procedure for registering intellectual property, protecting the rights of owners of innovative developments, and reducing bureaucratic obstacles are just some of the measures that will help speed up the process of commercialising innovations.

Second, investment in R&D and education is critical to ensuring innovative growth. The government should promote the development of research institutes, laboratories and technology parks, as well as encourage businesses to invest in research and development. Involvement of the business sector in cooperation with universities and research institutes will help to effectively use scientific potential to create innovative products and technologies.

Third, promoting Ukrainian innovative goods and services on foreign markets requires the development of international cooperation. Ukrainian enterprises should actively cooperate with foreign companies, participate in international exhibitions, conferences and business forums. It is also important to develop diplomatic relations and trade delegations to actively promote Ukrainian innovations on the global market.

However, to ensure the success of the innovative development of domestic business, it is important to ensure coordination of efforts between government agencies, business, academic institutions and the public sector. Only through joint efforts will the country be able to become an innovation leader and attract investment and technology from abroad.

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