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8 February 2018

Brain Drain, Demographic Crisis in Ukraine and Possible Solutions

Dmytro Shestakov

Managing Partner of the Innovations Development Platform

"Ukraine has faced a sad situation for the recent three decades. According to the official sources, 350 thousand engineers and scientists were involved in R&D in 1990. Today, their number is less than 50 thousand. I mean people having special higher education and working in the R&D area. To survive, some of them switched to trading, construction and other earnings for subsistence. Some of them have died. Others left for the USA, China, Israel, or Europe. The brain drain has not stopped yet. We have the problem of science and R&D aging. In the most recent 25 years, working and studying in this direction have not been popular or profitable. As a result, we have the age gap between scientists and engineers. In R&D, the average age is 50+."

Republished from HVYLYA.net

 

What is the present-day situation with brains in Ukraine?

For several decades of the arms race, Ukraine was the talent foundry in the USSR. The research and development (R&D) base was in Ukraine. According to various estimates, about 80% of R&D operations took place in Ukraine. However, we may assert that Ukraine was a global R&D leader. Besides, in 1991, Ukraine was the largest storage of arms in the world.

Creation of Silicon Valley, DARPA in the USA and development of the Israeli innovative science model were possible due to contributions of the Ukrainian scientists, due to satellite development by our engineers from Dnipropetrovsk and Kharkiv. It was the trigger mechanism for Americans launching DARPA. Developing this direction, the United States began creation of Silicon Valley on the basis of Stanford University.

Thus, talking about brains in Ukraine, we have to remember the historically formed knowledge base. And it’s not a fantasy plucked from the air. We still have these people in our country, since not all of them have left Ukraine. Presently, this potential has transformed to the fast IT development. Now, we are among global IT leaders.

However, we have much to do yet. Ukraine has faced a sad situation for the recent three decades. According to the official sources, 350 thousand engineers and scientists were involved in R&D in 1990. Today, their number is less than 50 thousand. I mean people having special higher education and working in the R&D area. To survive, some of them switched to trading, construction and other earnings for subsistence. Some of them have died. Others left for the USA, China, Israel, or Europe. The brain drain has not stopped yet. We have the problem of science and R&D aging. In the most recent 25 years, working and studying in this direction have not been popular or profitable. As a result, we have the age gap between scientists and engineers. In R&D, the average age is 50+.

Only now, our youth come to this industry due to the IT sector or innovation business. We have numerous new training courses (in particular, private ones) in the education system. For instance, Unit Factory. We have the Machine Learning project managed by Mr. Dmytro YERIOMIN. There are also projects in Kharkiv, implemented in cooperation with Kharkiv Polytechnic Institute. Lviv Polytechnic Institute is also engaged in this direction. Even with no active involvement of the Government in this process, the intellectual potential finds its way ahead and develops naturally, although harder and longer. If we intend to stop the staff outflow, involvement of the state is required, since our young potential leaves for Western countries in view of the lack of the appropriate conditions in Ukraine.

Where and why do our young brains go?

Our brains leave for those countries where R&D is actively developed, which means that they have the investment capital since the research and development operation is known for its highest risk investments. The level of such ideas conversion is quite low and very specific. People go to the USA, Israel, Singapore, South Korea, France, Germany, Great Britain, Malaysia. In these countries, the investment ratios are considerably higher, and they offer more comfortable living for a professional.

What can be done by the state? The only option is ensuring of alternative incubation conditions for capital and investment engagement in this direction. People should have the alternative to stay here, as profits of people having certain competitive competencies are very low in our country. Everyone needs foods and drinks, wants to get good education and have the ability to ensure good living conditions for children.

Can we find a good solution to our situation in neighbouring countries, for instance, in Poland? They faced the similar situation about two decades ago …

Poland demonstrates a considerably higher dynamics of development in this direction. However, Poland was not the number one military storage about two decades ago. The country had no such resources, and its elites, in contrast to ours, did not care for R&D, innovations or modern strategies of local development. On the other hand, Poland has no oligarchic system. Oligarchs are reluctant to adopt the economy development models of local investments. The oligarchic system is interested in quick returns. By the way, we can observe such situation in the Ukrainian agricultural sector as the land sale moratorium operating for the benefit of major agricultural holdings that would not want to pay the market price of land lease.

How will we feel the consequences of the demographic crisis in 30-50 years?

If the current dynamics persists, we’ll have only low-skilled human resources remaining! At the same time, we are facing the national aging. Sure, it’s typical of many countries. But, we have the huge Retirement Fund’s deficit and a half of the economy in shadow, exerting higher loads on the working population. All in all, what result of our brain drain is expected? – A deep social crisis. The level of highly-paid workers will become lower. Even average-skilled workers will leave Ukraine. We have the deficit of welders and other technicians. We are officially ahead of other European countries in terms of our migrants to Poland. Romania, Poland and Hungary issue their passports to many residents of our Chernivtsi, Ivano-Frankivsk and Zakarpattia Regions. Humans follow their needs. And no patriotic slogans will help.

As an expert implementing innovations in Ukraine, do you think innovation efforts can change the situation in our country?

And, in general, an average citizen would, probably, have no understanding of innovations meaning. Why is it so?

They may have no understanding of innovations meaning because they are not motivated to make this issue clear for themselves. However, I’m sure that an average citizen should have the ability to explain what innovation is.

An economic system demonstrates sustainable development if it may create a competitive product. In such case, it can generate enough money for development. We have to develop our state institutes, and improve the general infrastructure. Is the state currently able to generate the product creation culture? Perhaps, it is not. But the private business sector can do it. It has the relevant experience, risk appetite, qualifications and competences. Innovations should be cultivated. Completion of the judicial system and law reform is our top priority. The supremacy of law has to be ensured. Otherwise, no systemic investments in Ukraine are possible. Even we are afraid of investing own funds in our country, let alone foreign investors. As long as we have no confidence in our country, no significant foreign investment will come. Innovations are economic tools in form of the relevant acts and measures package. However, such tools work in a certain environment only.

Which Ukrainian projects have adopted this direction? Which developments can be mentioned here? Even if they are still at the very beginning of their way, or midway …

We have such! More than a dozen of Ukrainian start-ups have attracted foreign investors. In particular, in the IT industry. Infrastructure initiatives emerge from time to time, despite the fact that the state is quite infantile in this direction. Everyone supports it on paper, whereas, in fact, they all hibernate and expect a miracle.

For instance, creation of CLUST-UA, the Ukrainian Agency of Cluster Development, to form cluster models of regional development, is an innovation in its nature. Innovations show better development in a cluster model. The Ukrainian Association of Venture and Private Capital also implement a proactive policy. Incubators and accelerators are developing, while 70-80% of their residents keep on playing the brain drain game. Why? – They grow professionals who later receive promising offers from foreign companies.

We may say that powerful infrastructure projects are developed on the basis of major high schools. A good example here is Kyiv Polytechnic Institute, followed by Kharkiv Polytechnic Institute.

UNIT.City is a significant project for Ukraine in general. It deserves the highest respect. And it has no alternatives.

The Innovation Development Platform is, actually, a spin-off of UKROBORONPROM Ukrainian Defence Industry State-Run Concern. However, here is another problem, since spin-offs cannot be extended in Ukraine due to the imperfection of laws. It was mentioned in the World Bank’s report on innovations in Ukraine, in 2017.

How can these projects contribute to brain drain prevention?

Firstly, they attract investment resources required to implement projects in Ukraine. They attract Ukrainian investors.

Secondly, these companies, as a matter of fact, raise awareness. They teach the art to make own business models and conduct business internationally.

Thirdly, implementers of such projects take efforts to break the vicious circle – we get no investments since we are not trusted, and we won’t be trusted until positive examples are in place.