INDUSTRIAL POLICY FRAMEWORK OF UKRAINE

BASIC VERSION

based on studies of:

March 2015

COMMITTEE ON INDUSTRIAL POLICY AND ENTREPRENEURSHIP

Industrial  policy  means  targeted  government  efforts  to  develop  industrial  sector  through  a  set  of  policies  and  special  tools  

 Goals  

Policies  

Tools  

Industrial  Policy  Goals  

Higher  share  of  manufacturing  industry:  

   

25% of GDP

Share  of  manufacturing    industry  in  GDP:  

Higher  labor  produc?vity  in  

manufacturing  industry    $30K  

per  employee    

Labor  produc?vity  in  manufacturing  industry,    thds.  $  per  employee:  

14%  19%  

22%  24%  25%  

27%  31%  32%  

Ukraine  Poland  

Germany  Malaysia  

Czech  Rep.  Belarus  Korea  China  

13  27  30  33  36  

97  104  

134  

Ukraine  Turkey  Poland  

Slovakia  Czech  Rep.  Germany  

Japan  USA  

More  jobs  in  manufacturing  industry:  

 

2 million jobs    

Percentage  of  employed  in  manufacturing  industry    from  all  employed,  %  

Higher  exports  in  manufacturing  industry:  

   

80%

Manufacturing  industry  exports  (from  all  exports)  

Higher  Foreign  Direct  Investment  (FDI)  in  

manufacturing  industry:      

35%

Share  of  FDI  into  manufacturing  industry    from  all  FDI  

8%  

17%   19%   19%  23%   26%  7,6  mln  0,5  mln  

1,3  mln  

Ukraine  

Korea   Poland   Germany  Slovakia  

Czech  Rep.  1,4  mln  

4,2  mln   3  mln  

59%  

77%  

78%  

86%  

88%  

94%  

Ukraine  

Poland  

Turkey    

Korea  

Czech  Rep.  

China  

26%  

29%  

32%  

45%  

47%  

59%  

Ukraine  

Czech  Rep.  

Turkey  

Korea  

Hungary  

Poland  

Industrial  Policy  

Informa)onal  Policy  Educa)on  and  

Science  Policy  

Trade  Po

licy  

Credit  Policy  

Policies  

•  Selec)ve   import   subs)tu)on,  export  promo)on,  moving  up  the  value  chains  

•  Temporary   tax   and   export/import   incen)ves   for   new  produc)on,  R&D  and  IT  companies  

•  Cheaper   long-­‐term   loans   for   capital   investments   in   new  produc)on  and  for  increase  of  export  ac)vi)es  

•  Crea)on  of  “growth  points”  and  cluster  development  

•  Elimina)on  of  bureaucra)c,  corrup)on  and  an)-­‐compe))on  barriers,  harmoniza)on  with  regulatory  rules  of  EU  

•  Provision  of  skilled  workforce  to  produc)on  companies  and  R&D  centers,  science  commercializa)on  

•  Incen)ves   to   aJract   high-­‐quality   experts   to  Ukraine   and   to  restrain  brain  drain  

•  Promo)on   of   Ukraine   as   the   world’s   prime   loca)on   for  produc)on  and  R&D  

•  Preferen)al   public   procurement   for   domes)c   industrial  products,  increase  of  public  spending  for  economic  growth  

Policies   Key  Tasks  

Trade  Policy  

Tax  Policy  

Credit  Policy  

Infrastructure  and  Regional  Policy  

Regulatory  Policy  

Educa)on  and  Science  Policy  

Demographic  and  Migra)on  Policy  

Informa)onal  Policy  

Budgetary  Policy  

Key  Tools/Ini?a?ves  

Temporary  import  du)es  for  non-­‐raw  commodi)es  

Temporary  export  du)es  on  raw  materials  

Temporary  tax  incen)ves  for  new  produc)on  

Temporary  tax  incen)ves  for  new  R&D  companies  

Temporary  tax  incen)ves  for  new  ІТ  and  BPO  

companies  

Na)onal  Development  Bank  

State  Credit  and  Export  Agency  

Industrial  parks  Interregional  and    

cross-­‐border  coopera)on  programs    

Simplified  industry-­‐specific  regulatory  models  

Consecu)ve  implementa)on  of  EU  

direc)ves  

Public  procurement    from  local  manufacturers,  

incl.  SME  

State  loan  program  for  SMEs  

Public  construc)on  projects,  incl.  through  PPP  

Incen)ves  for  non-­‐government  educa)on  

ins)tu)ons  

Program  to  aJract  high-­‐quality  foreign  experts  

and  repatriates  to  Ukraine  

Promo)on  campaign:  Ukraine  as  produc)on  and  

R&D  plaXorm  

Policies  Promo)on  of  exporters’  interests,  incl.  through  

WTO  

Alloca)on  of  foreign  aid  for  growth  

Incen)ves  for  non-­‐government  research  

projects  

Incen)ves  for    talented  youth  

(“Brain  Drain  Stop”)  

Network  of  Ukrainians  abroad  

Introduc)on  of  a  modern  skill  set  in  educa)on  

programs  

Trade  Policy  

Tax  Policy  

Credit  Policy  

Infrastructure  and  Regional  Policy  

Regulatory  Policy  

Educa)on  and  Science  Policy  

Demographic  and  Migra)on  Policy  

Informa)onal  Policy  

Budgetary  Policy  

“Made  in  Ukraine”  

Compe))ve  access  to  networks  and  energy  

Horizontal  Tools  

Ver)-­‐cal  

Tools  

Selec)ve  Approach  (industries/clusters)  

Universal  Approach  (cross-­‐industrial)  

•  Crea)on  of  a  mixed  working  group  -­‐  “an)  crisis  economic  office”  (Cabinet  of  Ministers,  Parliament,  experts,  manufacturers’  associa)ons)  

•  Filtra)on  of  industry  sector  problems  by  size  and  urgency  +  division  by  accountable  bodies  (Central  Authori)es,  Cabinet  of  Ministers,  Parliament,  Presiden)al  Administra)on)  

•  Working  subgroups  for  problem  solving  with  maximum  transparency  for  the  public  

An?  Crisis  Program  

Ac?on  Plan  

•  Development  of  a  road  map  for  implementa)on  of  state  tools/ini)a)ves  for  industrial  growth  (with  indica)on  of  deadlines,  responsible  people,  resources,  etc.)  

•  Valida)on  of  the  program  by  key  stakeholders:  industry  associa)ons,  interna)onal  donors,  etc.  

•  Planned  program  realiza)on  ensuring  maximum  transparency  for  the  public  

Planned  Program  

COMMITTEE ON INDUSTRIAL POLICY AND ENTREPRENEURSHIP

   

VICTOR  GALASYUK    

Commibee  Chairman  Member  of  Parliament  

Ph.D.    

3  Sadova  St.,  office  219  Kyiv  01008,  Ukraine  

e-­‐mail:  galasyuk@rada.gov.ua  Tel.:  +38  (044)  255-­‐3595  Direct:  +38  (044)  255-­‐2851