FEG Ukrainian National Competitiveness Report 2013 by Pylyp Dukhliy

Ukrainian National Competitiveness Report 2013 Towards Sustained Growth and Prosperity

Ukrainian National Competitiveness Report 2013 is published by the Foundation for Effective Governance with support of the World Economic Forum

The Foundation for Effective Governance, Ukraine

Layout and design: Pylyp Dukhliy, respect-design.com.ua

Authors: Timur Boyko Anna Chukhay Natalia Dmytriuk Igor Goncharenko Vitaliy Kovalenko Tamara Podvysotska

Contents Preface 5 Brief Overview

Chapter 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

Annex A. Structure and Calculation of the Global Competitiveness Index 2013

Annex B. Ukrainian National Competitiveness Index 2013

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

Chapter 3. Level of business development is not sufficient for successful competition

3.1 Adaptability

3.2 Corporate governance

3.3 Corporate ethics

3.4 Corporate social responsibility

3.5 Human resources

3.6 Innovations

3.7 Internal business processes

3.8 Financing

Chapter 4. The Most Problematic Factors for Doing Business in Ukraine’s Regions

Chapter 5. Ukrainian regions’ results

Ukraine’s Regions Competitiveness Profiles

123

Preface

Preface Natalia Izosimova Director of the Foundation for Effective Governance

We are pleased to present the 6th edition of the Ukrainian National Competitiveness Report, which contains the National Competitiveness Index 2013. For the past three years, the Report has featured all 27 Ukrainian regions, benchmarking their performance over time as well as their performance against other regions and nations. The Ukrainian National Competitiveness Index is traditionally based on the methodology used by the World Economic Forum to calculate the Global Competitiveness Index, which today covers 148 nations. Recognising clearly the challenges faced by Ukraine still in post-crisis recovery, we have analysed institutions, infrastructure and education in the past two reports. This analysis is due to the fact that we believe these factors have the biggest impact on the medium and long-term growth of the country’s competitiveness and, at the same time, identify risks and opportunities. Responsibility for all these sectors lies largely with the government. However , ‘is the government the only factor of the economic development and improvement of citizens well-being?’ probably not! After all, this is “a two-way road”: the government creates favourable business environment, whilst businesses provide jobs and contributes to the gross domestic product. The Report 2013 looks into the business sophistication in Ukraine to see how well the business sector is prepared for current global challenges and trends, how efficiently it uses available resources and whether it prioritises ethic and social responsibilities. Our findings are quite controversial. On the one hand, the Ukrainian businesses show relatively fast dynamics and growth potential in some areas. On the other hand, businesses often lack the knowledge,

technology and financial resources or even sometimes the mere culture of doing business. The results are diverse across the country: business sophistication varies by region, sector and company size. Ukraine’s future success in the global competition will largely depend on how successful businesses are in unleashing their potentials and bridge the gap between the ranking leaders in the world. The six-year history of the Ukrainian National Competitiveness Report proves that the study is soughtafter by many different users, from central and local governments to students. The Report is a source of objective, methodology-based and unique information used in strategic decision-making on the development of the country and particular regions as well as on investing and locating of businesses. The findings help to identify weaknesses and competitive advantages of each of the 27 Ukrainian regions, encouraging a healthy competition and setting regional development guidelines. In addition, the information gives motivation for having an open dialogue between the government, business and the general public, the three forces that together drive the country’s productivity and the nation’s wellbeing. Such dialogue targets to set priorities and spur economic reforms and long-term development programs. We hope this Report will find an even wider application and make a valuable contribution to Ukraine’s economic prosperity and international image. To this end, the Foundation has launched and maintains the national competitiveness portal, holds workshops and training sessions across the country and publishes analytics and studies.

Brief Overview

Brief Overview Ukrainian National Competitiveness Report 2013 consists of four chapters. The first chapter presents the calculation methodology of the World Economic Forum, which was used in the Report to measure the competitiveness of Ukrainian regions. The appendices to the chapter provide a detailed description of the Index structure as well as statistical data and the questions addressed to business executives in the regions. The second chapter of the Report describes the deliverables of the study on the competitiveness of Ukrainian regions. This chapter gives an analysis of the competitive strengths and weaknesses of the regions in general, revealing similarities and differences in individual assessments, and comparing these results against a sample of 148 countries. The third chapter relates to the specific issues. It gives a more detailed analysis of the current situation and Figure I

describes the potential impact of business sophistication on Ukraineâ&#x20AC;&#x2122;s competitiveness. The chapter provides the detailed analysis of the business sophistication factors, such as adaptability, corporate governance, corporate ethics, corporate social responsibility, professional management, innovations, internal business processes, financial market development and business financing. The fourth chapter analyzes the results of the Executive Opinion Survey in terms of the main problematic factors for doing business in Ukraine, by industry and region. The fifth chapter gives a short description of each Ukrainian regionâ&#x20AC;&#x2122;s results in the national ranking. Finally, the report provides profiles of the competitiveness of each region, including the ranking and the data values used to calculate the Index.

Ukrainian National Competitiveness Index 2013 Kyiv

4.40

Kharkiv

4.25

Odesa

4.18

Donetsk

4.17

Dnipropetrovsk

4.15

Lviv

4.07

KyivOblast

4.06

Zaporizhzhya

4.03

Poltava

4.02

Ukraine (regionsâ&#x20AC;&#x2122; average)

4.01

Sevastopol

4.01

AR Crimea

4.00

Rivne

4.00

Khmelnytsky

3.98

Sumy

3.98

Ivano-Frankivsk

3.98

Vinnytsya

3.97

Volyn

3.97

Cherkasy

3.96

Mykolayiv

3.96

Zakarpattya

3.96

Luhansk

3.96

Chernivtsi

3.95

Chernihiv

3.93

Ternopil

3.88

Zhytomyr

3.88

Kherson

3.87

Kirovohrad

3.83

3.2

3.4

3.6

3.8

4.0

4.2

4.4

Competitiveness Ranking

The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience*

XAVIER SALA-I-MARTIN BENAT BILBAO-OSORIO JENNIFER BLANKE MARGARETA DRZENIEK HANOUZ THIERRY GEIGER CAROLINE KO World Economic Forum

*WEF, Global Competitiveness Report 2013

At the time this Report is being released, the world economy continues to emerge slowly from the most serious economic crisis of the post – World War II period – one that has deeply transformed the global economy and highlighted the increasingly important role that emerging markets and developing economies play in the global economy. As advanced economies are searching for ways to speed up their economic engines, emerging and developing countries have been important drivers of the global economic recovery. As a result, the nature of the relationship between advanced economies and emerging ones has evolved, and emerging and developing countries have created stronger ties among themselves. Among the advanced economies, two patterns seem to emerge: the United States, Canada, and Japan are expected to grow at a gentle pace, while the prospects for the euro zone are more uncertain, especially as tight credit conditions continue to limit domestic demand. More generally, the new global economic landscape raises questions as to the very distinction between advanced and emerging economies, particularly when it comes to growth and competitiveness. Against this background, the past year has seen some progress in rebuilding global confidence, so recovery looks more assured today than it did just one year ago. Many of the tail risks that concerned us in the last edition have not come to pass, in particular in the United States, which did not fall off the “fiscal cliff”; in Europe, where the breakup of the euro zone was avoided and where sovereign bond differentials have drastically narrowed; and in China, where fears of a hard landing have receded for the time being. Despite this more positive global outlook, some uncertainty remains. In advanced economies, the potential consequences of a tapering and eventual halt of quantitative easing in the United States, the aggressive yet still incomplete financial and structural measures adopted in Japan, and the persistent unemployment and economic recovery challenges in Europe are factors that could put future economic performance at risk. In emerging markets, it is uncertain how protests in Brazil and Turkey, the credit crunch in China, and the potentially volatile capital flows to emerging and developing markets will affect growth in these economies. And critical challenges remain: policymakers around the globe need to ensure that public finances are sustainable in the longer term, where the pains of deleveraging will be particularly felt by advanced economies. Around the world, unemployment or the threat of it remains one of the main challenges to long-term social sustainability. Indeed, the experience of recent years has underscored social sustainability as key to longer-term competitiveness, and thus to sustainable growth. Against this challenge, one of the elements gaining in importance in fostering countries’ competitiveness is education. A perception is growing that educational systems in many countries could better respond to the needs of labor markets, help economies to avoid skills gaps, and ensure that adequately trained human capital is available to support business activity as well as to develop innovative capacity and entrepreneurship. It is therefore to be expected that, over the coming years, a series of major systemic reviews of educational frameworks at the national level will be necessary in many countries across all stages of development. Overall, although there are indications that

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

CHAPTER 1

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 12

economic policies and measures are shifting in the right direction, efforts must be sustained in order to safeguard the progress achieved and to keep the global economy on a sustainable growth path going forward. Encouraging, sustaining, and enhancing growth will require decisive action by leaders in order to boost their countries’ competitiveness and future economic outlook. Reforms and the right set of investments to enhance competitiveness will be crucial for the economic transformations that can lead to sustained higher growth over the longer term. It is therefore imperative that competitiveness features high on the economic reform agenda of both advanced and emerging and developing economies. For more than three decades, the World Economic Forum’s annual Global Competitiveness Reports have studied and benchmarked the many factors underpinning national competitiveness. From the onset, the goal has been to provide insight and stimulate discussion among all stakeholders about the best strategies and policies to help countries to overcome the obstacles to improved competitiveness. In the current challenging economic environment, our work is a critical reminder of the importance of sound structural economic fundamentals for sustained growth. Since 2005, the World Economic Forum has based its competitiveness analysis on the Global Competitiveness Index (GCI), a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness. Going forward, the World Economic Forum will further support countries in their quest for higher competitiveness by compiling and publishing a repository of public-private practices that countries have implemented in order to improve their competitiveness. Together with the Index results, these practices will inform a series of structured multi-stakeholder dialogues (see Box 1) that will be piloted over the coming year. We hope that this new initiative will support transformations toward higher competitiveness at regional and national levels.

Figure 1.1

THE 12 PILLARS OF COMPETITIVENESS We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be reached by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to grow faster over time. The concept of competitiveness thus involves static and dynamic components. Although the productivity of a country determines its ability to sustain a high level of income, it is also one of the central determinants of its returns on investment, which is one of the key factors explaining an economy’s growth potential. Many determinants drive productivity and competitiveness. Understanding the factors behind this process has occupied the minds of economists for hundreds of years, engendering theories ranging from Adam Smith’s focus on specialization and the division of labor to neoclassical economists’ emphasis on investment in physical capital and infrastructure, and, more recently, to interest in other mechanisms such as education and training, technological progress, macroeconomic stability, good governance, firm sophistication, and market efficiency, among others. While all of these factors are likely to be important for competitiveness and growth, they are not mutually exclusive – two or more of them can be significant at the same time, and in fact that is what has been shown in the economic literature. This open-endedness is captured within the GCI by including a weighted average of many different components, each measuring a different aspect of competitiveness. These components are grouped into 12 pillars of competitiveness (Figure 1.1). First pillar: Institutions The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate

The 12 pillars of competitiveness

Basic requirements • Institutions • Infrastructure • Macroeconomic environment • Health and primary education

factor-driven

Efficiency enhancers • Higher education and training • Goods market efficiency • Labor market efficiency • Financial market development • Technological readiness • Market size

efficiency-driven

Innovation and sophistication factors • Business sophistication • Innovation

innovation-driven

Key for economies

A country’s competitiveness is widely accepted as the key driver for sustaining prosperity and raising the wellbeing of its citizens. Enhancing competitiveness is a long-term process that requires improvement across many areas as well as long-lasting commitments from relevant stakeholders to mobilize resources, time, and effort. Accordingly, to make the right decisions, these stakeholders need information and data. For more than 30 years, the World Economic Forum has studied and benchmarked competitiveness. From the outset, our goal has been to provide insight and stimulate discussion among all stakeholders to determine the best strategies, policies, and activities for overcoming the obstacles to improving competitiveness. Against this backdrop, the Forum is taking the next step and will embark on two new initiatives  –  the Competitiveness Lab and Competitiveness Practices Repository – to orchestrate an informed multi-stakeholder process for better understanding and shaping the competitiveness agenda of a country or region. The Competitiveness Lab will create a safe space for sustained dialogue in order to encourage better decision making and to help

wealth. The importance of a sound and fair institutional environment has become all the more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery, given the increasing role played by the state at the international level and for the economies of many countries. The quality of institutions has a strong bearing on competitiveness and growth. It influences investment decisions and the organization of production and plays a key role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies. For example, owners of land, corporate shares, or intellectual property are unwilling to invest in the improvement and upkeep of their property if their rights as owners are not protected. The role of institutions goes beyond the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive ureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services for the business sector, and political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. In addition, the proper management of public finances is also critical for ensuring trust in the national business environment. Indicators capturing the quality of government management of public finances are therefore included here to complement the measures of macroeconomic stability captured in pillar 3 below. Although the economic literature has focused mainly on public institutions, private institutions are also an

define an action plan with priorities that supports the competitiveness transformation of a country or region. As part of this initiative, and in order to provide additional knowledge inputs into the dialogue, the Forum is also building a repository of competitiveness practices. Given the crucial importance of supporting the coordinated efforts of different agents to improve competitiveness, the Forum’s expertise in building public-private strategic collaborations, and the relative knowledge gap in this area, the repository will focus on providing information about competitiveness-driven public-private collaborations. The information covered in this repository will include a definition of specific contexts and competitiveness challenges that have been faced by a particular country or region, a description of the actions that were adopted, and the implementation process of those actions, including the identification of key barriers and enablers that allow the practice to succeed. The objective of compiling this information is to support cross-country learning and to help stakeholders better assess the possibility of scaling up and replicating any specific practice in their own country or region.

important element of the process of creating wealth. The global financial crisis, along with numerous corporate scandals, have highlighted the relevance of accounting and reporting standards and transparency for preventing fraud and is management, ensuring good governance, and maintaining investor and consumer confidence. An economy is well served by businesses that are run honestly, where managers abide by strong ethical practices in their dealings with the government, other firms, and the public at large. Private-sector transparency is indispensable to business; it can be brought about through the use of standards as well as auditing and accounting practices that ensure access to information in a timely manner. Second pillar: Infrastructure Extensive and efficient infrastructure is critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can develop within a country. Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways. A well-developed transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services. Effective modes of transport – including quality roads, railroads, ports, and air transport – enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

Box 1: The Competitiveness Lab and Competitiveness Practices Repository

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 14

most suitable jobs. Economies also depend on electricity supplies that are free from interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive telecommunications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all available relevant information. Third pillar: Macroeconomic environment The stability of the macroeconomic environment is important for business and, therefore, is significant for the overall competitiveness of a country. Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognized that macroeconomic disarray harms the economy, as we have seen in recent years, notably in the European context. The government cannot provide services efficiently if it has to make high-interest payments on its past debts. Running fiscal deficits limits the government’s future ability to react to business cycles. Firms cannot operate efficiently when inflation rates are out of hand. In sum, the economy cannot grow in a sustainable manner unless the macro environment is stable. Macroeconomic stability captured the attention of the public most recently when some advanced economies, notably the United States and some European countries, needed to take urgent action to prevent macroeconomic instability when their public debt reached unsustainable levels in the wake of the global financial crisis. It is important to note that this pillar evaluates the stability of the macroeconomic environment, so it does not directly take into account the way in which public accounts are managed by the government. This qualitative dimension is captured in the institutions pillar described above. Fourth pillar: Health and primary education A healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health services is thus critical for clear economic, as well as moral, considerations. In addition to health, this pillar takes into account the quantity and quality of the basic education received by the population, which is increasingly important in today’s economy. Basic education increases the efficiency of each individual worker. Moreover, often workers who have received little formal education can carry out only simple manual tasks and find it much more difficult to adapt to more advanced production processes and techniques, and therefore contribute less to devising or executing innovations. In other words, lack of basic education can become a constraint on business development, with firms finding it difficult to move up the value chain by producing more sophisticated or value intensive products. Fifth pillar: Higher education and training Quality higher education and training is crucial for economies that want to move up the value chain beyond

simple production processes and products. Box 2 outlines the linkages between fostering cross-border value chains and competitiveness in more detail. In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the production system. This pillar measures secondary and tertiary enrollment rates as well as the quality of education as evaluated by business leaders. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the job training – which is neglected in many economies – for ensuring a constant upgrading of workers’ skills. Sixth pillar: Goods market efficiency Countries with efficient goods markets are well positioned to produce the right mix of products and services given their particular supply-and-demand conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency, and thus business productivity, by ensuring that the most efficient firms, producing goods demanded by the market, are those that thrive. The best possible environment for the exchange of goods requires a minimum of government intervention that impedes business activity. For example, competitiveness is hindered by distortionary or burdensome taxes and by restrictive and discriminatory rules on foreign direct investment (FDI) – which limit foreign ownership – as well as on international trade. The recent economic crisis has highlighted the high degree of interdependence of economies worldwide and the degree to which growth depends on open markets. Protectionist measures are counterproductive as they reduce aggregate economic activity. Market efficiency also depends on demand conditions such as customer orientation and buyer sophistication. For cultural or historical reasons, customers may be more demanding in some countries than in others. This can create an important competitive advantage, as it forces companies to be more innovative and customer-oriented and thus imposes the discipline necessary for efficiency to be achieved in the market. Seventh pillar: Labor market efficiency The efficiency and flexibility of the labor market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs. Labor markets must therefore have the flexibility to shift workers from one economic activity to another rapidly and at low cost, and to allow for wage fluctuations without much social disruption. The importance of the latter has been dramatically highlighted by events in Arab countries, where rigid labor markets were an important cause of high youth unemployment, sparking social unrest in Tunisia that then spread across the region. Youth unemployment is also high in a number of European countries, where important barriers to entry into the labor market remain in place. Efficient labor markets must also ensure clear strong incentives for employees and efforts to promote meritocracy at the workplace, and they must provide

As the relevance of international value chains continues to grow within the global economy, international trade is increasingly taking place within the production networks of multinational corporations. According to estimates from the Organisation for Economic Co-operation and Development (OECD), imported intermediate inputs account for about onequarter of OECD members’ exports. For China, this share is about 30 percent; it is about twice that for India and Brazil. From a national perspective, participation in value-chain trade has many benefits. Beyond export revenue, these include employment and indirect spillovers in areas such as management, technical know-how, and access to new technologies. The rise of cross-border value chains has important implications for countries’ economic and trade policies as well as for development efforts. One consequence is that crossborder trade in goods has become increasingly intertwined with trade in services and cross-border investment flows, as well as with the international movement of labor. For countries at more basic stages of development, the key question is not so much how to enter the value chain at the lowest level, but how to move up to more advanced steps of production. So what can countries do to benefit from this changing pattern of trade? As intermediate products may cross borders many times before being assembled into the final good, trade facilitation and other measures that reduce the transaction costs of trade – especially the cost of logistics – are key for production location. Participating successfully in international value chains requires ease in importing, which in many countries is still constrained by tariffs and other, more practical barriers such as customs procedures or high transport costs. equity in the business environment between women and men. Taken together these factors have a positive effect on worker performance and the attractiveness of the country for talent, two aspects that are growing more important as talent shortages loom on the horizon. Eighth pillar: Financial market development The financial and economic crisis has highlighted the central role of a sound and well-functioning financial sector for economic activities. An efficient financial sector allocates the resources saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to those entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. A thorough and proper assessment of risk is therefore a key ingredient of a sound financial market. Business investment is also critical to productivity. Therefore economies require sophisticated financial markets that can make capital available for private-sector

Whether a country can participate in cross-border value chains crucially depends on a number of factors that include its productivity and, therefore, the factors that determine competitiveness as captured by the Global competitiveness Index (GCI). Among these factors are the availability of healthy and educated workforce, robust infrastructure, deep penetration of information and communication technologies, a solid and efficient institutional framework, and efficient labor markets. Although all these factors are needed to enter the value chain, they rise in importance as the country wishes to move up. The higher a country moves up the value chain, the greater the importance of efficiency enhancers and innovation and sophistication factors. A specific feature of value-added trade is its strong link with services trade. Transactional services – such as logistics to transport the good to destination or telecommunications to stay in touch and obtain information – must be available for a country to enter and move up the value chain. Making these services available necessitates a dynamic and open business environment that benefits from healthy levels of domestic competition and openness to international trade and investment, issues that are captured by the goods markets efficiency pillar of the GCI. Overall, from a national policy perspective, the fact that most global trade is now increasingly taking place in value chains strengthens the link between trade and competitiveness policies and raises the stakes for competitiveness-enhancing measures even further. Competitiveness-enhancing policies are particularly important for countries to move up the value chain. In other words, by implementing competitiveness-enhancing policies, countries can reap higher benefits that will result in economic development and employment opportunities. investment from such sources as loans from a sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. In order to fulfill all those functions, the banking sector needs to be trustworthy and transparent, and – as has been made so clear recently – financial markets need appropriate regulation to protect investors and other actors in the economy at large. Ninth pillar: Technological readiness In today’s globalized world, technology is increasingly essential for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICTs) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness. ICTs have evolved into the “general purpose technology” of our time, given their

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

Box 2: Benefiting from globalizing value chains by raising competitiveness

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 16

critical spillovers to other economic sectors and their role as industry-wide enabling infrastructure. Therefore ICT access and usage are key enablers of countries’ overall technological readiness. Whether the technology used has or has not been developed within national borders is irrelevant for its ability to enhance productivity. The central point is that the firms operating in the country need to have access to advanced products and blueprints and the ability to absorb and use them. Among the main sources of foreign technology, FDI often plays a key role, especially for countries at a less advanced stage of technological development. It is important to note that, in this context, the level of technology available to firms in a country needs to be distinguished from the country’s ability to conduct bluesky research and develop new technologies for innovation that expand the frontiers of knowledge. That is why we separate technological readiness from innovation, captured in the 12th pillar, described below. Tenth pillar: Market size The size of the market affects productivity since large markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for domestic markets, especially for small countries. Vast empirical evidence shows that trade openness is positively associated with growth. Even if some recent research casts doubts on the robustness of this relationship, there is a general sense that trade has a positive effect on growth, especially for countries with small domestic markets. Thus exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country. By including both domestic and foreign markets in our measure of market size, we give credit to export-driven economies and geographic areas (such as the European Union) that are divided into many countries but have a single common market. Eleventh pillar: Business sophistication There is no doubt that sophisticated business practices are conducive to higher efficiency in the production of goods and services. Business sophistication concerns two elements that are intricately linked: the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies. These factors are particularly important for countries at an advanced stage of development when, to a large extent, the more basic sources of productivity improvements have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the quantity and quality of local suppliers and the extent of their interaction, is important for a variety of reasons. When companies and suppliers from a particular sector are interconnected in geographically proximate groups, called clusters, efficiency is heightened, greater opportunities for innovation in processes and products are created, and barriers to entry for new firms are reduced. Individual firms’ advanced operations and strategies (branding, marketing, distribution, advanced production processes, and the production of unique and sophisticated products) spill over into the economy and lead to sophisticated and modern business processes across the country’s business sectors.

Twelfth pillar: Innovation Innovation can emerge from new technological and nontechnological knowledge. Non-technological innovations are closely related to the know-how, skills, and working conditions that are embedded in organizations and are therefore largely covered by the eleventh pillar of the GCI. The final pillar of competitiveness focuses on technological innovation. Although substantial gains can be obtained by improving institutions, building infrastructure, reducing macroeconomic instability, or improving human capital, all these factors eventually run into diminishing returns. The same is true for the efficiency of the labor, financial, and goods markets. In the long run, standards of living can be largely enhanced by technological innovation. Technological breakthroughs have been at the basis of many of the productivity gains that our economies have historically experienced. These range from the industrial revolution in the 18th century and the invention of the steam engine and the generation of electricity to the more recent digital revolution. The latter is not only transforming the way things are being done, but also opening a wider range of new possibilities in terms of products and services. Innovation is particularly important for economies as they approach the frontiers of knowledge and the possibility of generating more value by only integrating and adapting exogenous technologies tends to disappear. Although less-advanced countries can still improve their productivity by adopting existing technologies or making incremental improvements in other areas, for those that have reached the innovation stage of development this is no longer sufficient for increasing productivity. Firms in these countries must design and develop cutting-edge products and processes to maintain a competitive edge and move toward even higher value-added activities. This progression requires an environment that is conducive to innovative activity and supported by both the public and the private sectors. In particular, it means sufficient investment in research and development (R&D), especially by the private sector; the presence of high-quality scientific research institutions that can generate the basic knowledge needed to build the new technologies; extensive collaboration in research and technological developments between universities and industry; and the protection of intellectual property, in addition to high levels of competition and access to venture capital and financing that are analyzed in other pillars of the Index. In light of the recent sluggish recovery and rising fiscal pressures faced by advanced economies, it is important that public and private sectors resist pressures to cut back on the R&D spending that will be so critical for sustainable growth going into the future. The interrelation of the 12 pillars Although we report the results of the 12 pillars of competitiveness separately, it is important to keep in mind that they are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing (pillar 8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar 6).

Subindex weights and income thresholds for stages of development

GDP per capita* (USD) thresholds**

Stage 1: Factor-driven

Transition from stage 1 to stage 2

Stage 2: Efficiency-driven

Transition from stage 2 to stage 3

Stage 3: Innovation-driven

<2 000

2 000-2 999

3 000-8 999

9 000-17 000

>17 000

Weights for basic requirements subindex, %

40-60

20-40

Weights for efficiency enhancers subindex, %

35-50

Weights for innovation and sophistication factors subindex, %

5-10

10-30

* For economies with a high dependency on mineral resources, GDP per capita is not the sole criterion for the determination of the stage of development. See text for details. ** There is inverse dependence between GDP per capita and weight in the range of subindex weights. For example, for a country with GDP per capita of USD 2999 the weight used for subindex “Basic Requirements” is 40%.

Table 1.2

Countries/economies at each stage of development

Stage 1: Factor-driven (38 economies)

Transition from stage 1 to stage 2 (17 economies)

Stage 2: Efficiency-driven (33 economies)

Transition from stage 2 to stage 3 (21 economies)

Stage 3: Innovation-driven (35 economies)

Bangladesh

Algeria

Albania

Argentina

Australia

Benin

Angola

Bosnia and Herzegovina

Barbados

Austria

Burkina Faso

Armenia

Bulgaria

Brazil

Bahrain

Burundi

Azerbaijan

Cape Verde

Chile

Belgium

Cambodia

Bhutan

China

Costa Rica

Canada

Cameroon

Bolivia

Colombia

Croatia

Cyprus

Chad

Botswana

Dominican Republic

Estonia

Czech Republic

Cote d'Ivoire

Brunei Darussalam

Ecuador

Hungary

Denmark

Ethiopia

Gabon

Egypt

Kazakhstan

Finland

Gambia, The

Honduras

El Salvador

Latvia

France

Ghana

Iran, Islamic Rep.

Georgia

Lebanon

Germany

Guinea

Kuwait

Guatemala

Lithuania

Greece

Haiti

Libya

Guyana

Malaysia

Hong Kong SAR

India

Moldova

Indonesia

Mexico

Iceland

Kenya

Mongolia

Jamaica

Oman

Ireland

Kyrgyz Republic

Morocco

Jordan

Panama

Israel

Lao PDR

Philippines

Macedonia, FYR

Poland

Italy

Lesotho

Saudi Arabia

Mauritius

Russian Federation

Japan

Liberia

Sri Lanka

Montenegro

Seychelles

Korea, Rep.

Madagascar

Venezuela

Namibia

Slovak Republic

Luxembourg

Malawi

Paraguay

Turkey

Malta

Mali

Peru

Uruguay

Netherlands

Mauritania

Romania

New Zealand

Mozambique

Serbia

Norway

Myanmar

South Africa

Portugal

Nepal

Surinam

Puerto Rico

Nicaragua

Swaziland

Qatar

Nigeria

Thailand

Singapore

Pakistan

Timor-Leste

Slovenia

Rwanda

Tunisia

Spain

Senegal

Ukraine

Sweden

Sierra Leone

Switzerland

Tanzania

Taiwan, China

Uganda

Trinidad and Tobaco

Vietnam

United Arab Emirates

Yemen

United Kingdom

Zambia

United States

Zimbabwe

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

Table 1.1

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 18

Although the pillars are aggregated into a single index, measures are reported for the 12 pillars separately because such details provide a sense of the specific areas in which a particular country needs to improve. The appendix describes the exact composition of the GCI and technical details of its construction.

STAGES OF DEVELOPMENT AND THE WEIGHTED INDEX While all of the pillars described above will matter to a certain extent for all economies, it is clear that they will affect them in different ways: the best way for Cambodia to improve its competitiveness is not the same as the best way for France to do so. This is because Cambodia and France are in different stages of development: as countries move along the development path, wages tend to increase and, in order to sustain this higher income, labor productivity must improve. In line with well-known economic theory of stages of development, the GCI assumes that, in the first stage, the economy is factor-driven and countries compete based on their factor endowments – primarily unskilled labor and natural resources. Companies compete on the basis of price and sell basic products or commodities, with their low productivity reflected in low wages. Maintaining competitiveness at this stage of development hinges primarily on well-functioning public and private institutions (pillar 1), a well-developed infrastructure (pillar 2), a stable macroeconomic environment (pillar 3), and a healthy workforce that has received at least a basic education (pillar 4). As a country becomes more competitive, productivity will increase and wages will rise with advancing development. Countries will then move into the efficiencydriven stage of development, when they must begin to develop more efficient production processes and increase product quality because wages have risen and they cannot increase prices. At this point, competitiveness is increasingly driven by higher education and training (pillar 5), efficient goods markets (pillar 6), well-functioning labor markets (pillar 7), developed financial markets (pillar 8), the ability to harness the benefits of existing technologies (pillar 9), and a large domestic or foreign market (pillar 10). Finally, as countries move into the innovation-driven stage, wages will have risen by so much that they are able to sustain those higher wages and the associated standard of living only if their businesses are able to compete with new and unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes (pillar 11) and by innovating new ones (pillar 12). The GCI takes the stages of development into account by attributing higher relative weights to those pillars that are more relevant for an economy given its particular stage of development. That is, although all 12 pillars matter to a certain extent for all countries, the relative importance of each one depends on a country’s particular stage of development. To implement this concept, the pillars are organized into three subindexes, each critical to a particular stage of development. The basic requirements subindex groups those pillars most critical for countries in the factor-driven stage. The efficiency enhancers subindex

includes those pillars critical for countries in the efficiencydriven stage. And the innovation and sophistication factors subindex includes the pillars critical to countries in the innovation-driven stage. The three subindexes are shown in Figure 1.1. The weights attributed to each subindex in every stage of development are shown in Table 1.1. To obtain the weights shown in the table, a maximum likelihood regression of gross domestic product (GDP) per capita was run against each subindex for past years, allowing for different coefficients for each stage of development. The rounding of these econometric estimates led to the choice of weights displayed in Table 1.1. Implementation of stages of development Two criteria are used to allocate countries into stages of development. The first is the level of GDP per capita at market exchange rates. This widely available measure is used as a proxy for ages because internationally comparable data on wages are not available for all countries covered. The thresholds used are also shown in Table 1.1. A second criterion is used to adjust for countries that, based on income, would have moved beyond stage 1, but where prosperity is based on the extraction of resources. This is measured by the share of exports of mineral goods in total exports (goods and services), and assumes that countries that export more than 70 percent mineral products (measured using a five-year average) are to a large extent factor driven. However, for some resource-based economies that have reached very high levels of income, the capacity to increase the productivity of any other sector beyond mineral production will be based on the country’s capacity to boost innovation, as adopting technology from abroad is not sufficient to increase productivity to a degree that can sustain their high wage levels. At the same time these countries can afford to invest in innovation, given their high income. Consequently, countries that are resource driven and significantly wealthier than economies at the technological frontier are classified in the innovation-driven stage. Any countries falling in between two of the three stages are considered to be “in transition.” For these countries, the weights change smoothly as a country develops, reflecting the smooth transition from one stage of development to another. This allows us to place increasingly more weight on those areas that are becoming more important for the country’s competitiveness as the country develops, ensuring that the GCI can gradually “penalize” those countries that are not preparing for the next stage. The classification of countries into stages of development is shown in

DATA SOURCES To measure these concepts, the GCI uses statistical data from the State Statistics Service and others, including internationally recognized agencies (notably the World Bank, the International Monetary Fund (IMF), the United Nations Educational, Scientific and Cultural Organization (UNESCO), and the World Health Organization (WHO)). Also GCI uses data from the World Economic Forum’s annual Executive Opinion Survey (the Survey) to capture concepts that require a more qualitative assessment or for which internationally comparable statistical data are not available for the entire set of economies.

The composition of the GCI 2013 is detailed in the appendix of this chapter. This year only minor adjustments were made to the Index: zzfrom the first pillar, we removed the indicator Government services for improved business performance zzWe replaced the indicator effect of taxation on incentives to work and invest (indicator 6.04) with two new indicators derived from the Survey: the first captures the effect of taxation on incentives to invest and is included in the sixth pillar as indicator 6.04; the second measures the effect of taxation on incentives to work and enters the seventh pillar as indicator 7.05 zzWe replaced the indicator brain drain (indicator 7.07) with two new indicators derived from the Survey, measuring the capacity of a country to retain talent (indicator 7.08) and to attract talent (indicator 7.09), respectively.

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

ADJUSTMENTS TO THE GCI

COUNTRY COVERAGE The coverage this year has increased from 144 to 148 economies. The newly covered countries are Myanmar, Bhutan, and Lao PDR. We have also re-instated Tunisia and Angola into the Index, two countries that were not included in last yearâ&#x20AC;&#x2122;s edition. Tajikistan is not covered in this yearâ&#x20AC;&#x2122;s Report as Survey data could not be collected this year.

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 20

Annex A. Structure and Calculation of the Global Competitiveness Index 2013 У This appendix presents the structure of the Global Competitiveness Index 2013 (GCI). The same structure and calculation procedure are used for Ukrainian National Competitiveness Index. The numbering of the variables matches the numbering of the data tables. The number preceding the period indicates to which pillar the variable belongs (e.g., variable 1.11 belongs to the 1st pillar and variable 9.04 belongs to the 9th pillar). The computation of the GCI is based on successive aggregations of scores from the indicator level (i.e., the most disaggregated level) all the way up to the overall GCI score. Unless mentioned otherwise, we use an arithmetic mean to aggregate individual variables within a categorya. For the higher aggregation levels, we use the percentage shown next to each category. This percentage represents the category’s weight within its immediate parent category. Reported percentages are rounded to the nearest integer, but exact figures are used in the calculation of the GCI. For example, the score a country achieves in the 9th pillar accounts for 17 percent of this country’s score in the efficiency enhancers subindex, irrespective of the country’s stage of development. Similarly, the score achieved on the subpillar transport infrastructure accounts for 50 percent of the score of the infrastructure pillar. Unlike the case for the lower levels of aggregation, the weight put on each of the three subindexes (basic requirements, efficiency enhancers, and innovation and sophistication factors) is not fixed. Instead, it depends on each country’s stage of development, as discussed in the chapterb. For instance, in the case of Burundi – a country in the first stage of development – the score in the basic requirements subindex accounts for 60 percent of its overall GCI score, while it represents just 20 percent of the overall GCI score of Sweden, a country in the third stage of development. Variables that are not derived from the Executive Opinion Survey (Survey) are identified by an asterisk (*) in the following pages. For Technical Notes and Sources please refer to the Appendix B. To make the aggregation possible, these variables are transformed onto a 1-to7 scale in order to align them with the Survey results. We apply a min-max transformation, which preserves the order of, and the relative distance between, country scoresc. Indicators that are followed by the designation “1/2” enter the GCI in two different pillars. In order to avoid double counting, we assign a half-weight to each instanced.

Weight (%) within immediate parent category

BASIC REQUIREMENTS 1st pillar: Institutions............................................................................25% . Public institutions................................................................................................................75% A Property rights......................................................................................20% 1.01 Property rights 1.02 Intellectual property protection 1/2 Ethics and corruption............................................................................20% 1.03 Diversion of public funds 1.04 Public trust of politicians 1.05 Irregular payments and bribes Undue influence....................................................................................20% 1.06 Judicial independence 1.07 Favoritism in decisions of government officials Government inefficiency.......................................................................20% 1.08 Wastefulness of government spending 1.09 Burden of government regulation 1.10 Efficiency of legal framework in settling disputes 1.11 Efficiency of legal framework in challenging regulations 1.12 Transparency of government policymaking Security.................................................................................................20% 1.13 Business costs of terrorism 1.14 Business costs of crime and violence 1.15 Organized crime 1.16 Reliability of police services B. Private institutions............................................................................................................. 25% Corporate ethics...................................................................................50% 1.17 Ethical behavior of firms Accountability.......................................................................................50% 1.18 Strength of auditing and reporting standards 1.10 Efficacy of corporate boards 1.20 Protection of minority shareholders’ interests 1.21 Strength of investor protection*

2nd pillar: Infrastructure.....................................................................25% A. Transport infrastructure................................................................................................... 50% 2.01 Quality of overall infrastructure 2.02 Quality of roads 2.03 Quality of railroad infrastructure 2.04 Quality of port infrastructure 2.05 Quality of air transport infrastructure 2.06 Available airline seat kilometers (in a week, mln places x km)* B. Energy and telephony infrastructure...................................................................... 50% 2.07 Quality of electricity supply 2.08 Mobile telephone subscriptions (per 100 population) * 1/2 2.09 Fixed telephone lines (per 100 population) * 1/2

3rd pillar: Macroeconomic environment...................................25%

3.01 Government budget balance (% GDP) * 3.02 National savings rate (% GDP) * 3.03 Inflation (%) * e 3.04 Government debt (% GDP) * 3.05 Country credit rating*

4th pillar: Health and primary education..................................25% A. Health... ...................................................................................................................................... 50% 4.01 Business impact of malaria f 4.02 Malaria incidence (cases per 100 000 population)* f 4.03 Business impact of tuberculosis f 4.04 Tuberculosis incidence (cases per 100 000 population)* f 4.05 Business impact of HIV/AIDS f 4.06 HIV prevalence (% of adult population)* f 4.07 Infant mortality (deaths per 1000 live births)* 4.08 Life expectancy (years)* B. Primary education.............................................................................................................. 50% 4.09 Quality of primary education 4.10 Primary education enrollment rate*

. Quantity of education....................................................................................................... 33% A 5.01 Secondary education enrollment rate (gross %)* 5.02 Tertiary education enrollment rate (gross %)* B. Quality of education.......................................................................................................... 33% 5.03 Quality of the educational system 5.04 Quality of math and science education 5.05 Quality of management schools 5.06 Internet access in schools C. On-the-job training............................................................................................................. 33% 5.07 Local availability of specialized research and training services 5.08 Extent of staff training

6th pillar: Goods market efficiency..............................................17% A. Competition.............................................................................................................................67% Domestic competition.........................................................................75% g 6.01 Intensity of local competition 6.02 Extent of market dominance 6.03 Effectiveness of anti-monopoly policy 6.04 Extent of taxation on incentives to invest 6.05 Total tax rate (% profits)* 6.06 Number of procedures required to start a business* h 6.07 Time required to start a business (days)* h 6.08 Agricultural policy costs External competition...........................................................................25% g 6.09 Prevalence of trade barriers 6.10 Trade tariffs* 6.11 Prevalence of foreign ownership 6.12 Business impact of rules on FDI 6.13 Burden of customs procedures 6.14 Imports as a percentage of GDP* i B. Quality of demand conditions..................................................................................... 33% 6.15 Degree of customer orientation 6.16 Buyer sophistication

7th pillar: Labor market efficiency................................................17% A. Flexibility.................................................................................................................................. 50% 7.01 Cooperation in labor-employer relations 7.02 Flexibility of wage determination 7.03 Hiring and firing practices 7.04 Redundancy costs (weeks of salary)* 7.05 Extent and effect of taxation B. Efficient use of talent....................................................................................................... 50% 7.06 Pay and productivity 7.07 Reliance on professional management 1/2 7.08 Capacity to retain talent 7.09 Capacity to attract talent 7.10 Female participation in labor force*

8th pillar: Financial market development.................................17% A. Efficiency.................................................................................................................................. 50% 8.01 Availability of financial services 8.02 Affordability of financial services 8.03 Financing through local equity market 8.04 Ease of access to loans 8.05 Venture capital availability B. Trustworthiness and confidence.............................................................................. 50% 8.06 Soundness of banks 8.07 Regulation of securities exchanges 8.08 Legal rights index*

9th pillar: Technological readiness..............................................17% . Technological adoption................................................................................................... 50% A 9.01 Availability of latest technologies 9.02 Firm-level technology absorption 9.03 FDI and technology transfer B. ICT use ...................................................................................................................................... 50% 9.04 Internet users* 9.05 Broadband Internet subscriptions* 9.06 Internet bandwidth* 9.07 Mobile broadband subscriptions* 2.08 Mobile telephone subscriptions* 1/2 2.09 Fixed telephone lines * 1/2

10th pillar: Market size........................................................................17% . Domestic market size.......................................................................................................75% A 10.01 Domestic market size index* i B. Foreign market size........................................................................................................... 25% 10.02 Foreign market size index* k

INNOVATION AND SOPHISTICATION FACTORS 11th pillar: Business sophistication............................................50%

11.01 Local supplier quantity 11.02 Local supplier quality 11.03 State of cluster development 11.04 Nature of competitive advantage 11.05 Value chain breadth 11.06 Control of international distribution 11.07 Production process sophistication 11.08 Extent of marketing 11.09 Willingness to delegate authority 7.07 Reliance on professional management 1/2

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

EFFICIENCY ENHANCERS 5th pillar: Higher education and training..................................17%

12th pillar: Innovation...........................................................................50%

12.01 Capacity for innovation 12.02 Quality of scientific research institutions 12.03 Company spending on R&D 12.04 University-industry collaboration in R&D 12.05 Government procurement of advanced technology products 12.06 Availability of scientists and engineers 12.07 Utility patents* 1.02 Intellectual property protection 1/2

REFERENCES а. For each category i that consist from K indicators: 21

b. As described in the chapter, the weights are the following: Stage of development Stage 1: Factor-driven

Transition from stage 1 to stage 2

Stage 2: Efficiencydriven

Transition from stage 2 to stage 3

Stage 3: Innovationdriven

9 000-17 000

>17 000

20-40

GDP per capita* (USD) thresholds** <2 000

2 000-2 999

3 000-8 999

Weights for basic requirements subindex, % 60

40-60

Weights for efficiency enhancers subindex, % 35

35-50

Weights for innovation and sophistication factors subindex, % 5

5-10

10-30

с. The standard formula for converting hard data is the following: 6х

(country score – sample minimum) (sample maximum – sample minimum)

The “sample minimum” and “sample maximum” are, respectively, the lowest and highest country scores in the sample of countries covered by the GCI. In some instances, adjustments were made to account for extreme outliers. For those hard data variables for which a higher value indicates a worse outcome (eg, disease incidence, government debt), we rely on a normalization formula

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience 22

that, in addition to converting the series to a 1-to-7 scale, reverses it, so that 1 and 7 still corresponds to the worst and best possible outcomes, respectively: –6х

(country score – sample minimum) (sample maximum – sample minimum)

d. For those groups of variables that contain one or several half weight variables, country scores for those groups are computed as follows: (sum of scoreson full weight variables) + 0.5 х (sum of scoreson half weight variables) (full weight variables) + 0.5 х (count of full weight variables)

е. In order to capture the idea that both high inflation and deflation are detrimental, inflation enters the model in a U-shaped manner as follows: for values of inflation between 0.5 and 2.9 percent, a country receives the highest possible score of 7. Outside this range, scores decrease linearly as they move away from these values. f. The impact of malaria, tuberculosis, and HIV/ AIDS on competitiveness depends not only on their respective incidence rates, but also on how costly they are for business. Therefore, in order to estimate the impact of each of the three diseases, we combine its incidence rate with the Survey question on its perceived cost to businesses. To combine these data we first take the ratio of each country’s disease incidence rate relative to the highest incidence rate in the whole sample. The inverse of this ratio is then multiplied by each country’s score on the related Survey question. This product is then normalized to a 1-to-7 scale. Note that countries with zero reported incidence receive a 7, regardless their scores on the related Survey question. g. The “Competition” sub-pillar is the weighted average of two components: “Domestic competition” and “Foreign competition”. In both components, the included variables provide an indication of the extent to which competition is distorted. The relative importance of these distortions depends on the relative size of domestic versus foreign markets. This interaction between the domestic market and the foreign market is captured by the way we determine the weights of the two components. Domestic competition is the sum of consumption (C), investment (I), government spending (G), and exports (X), while foreign competition is equal to imports (M). Thus we assign a weight of (C+I+G+X)/ (C+I+G+X+M) to “Domestic competition” and a weight of M/(C+I+G+X+M) to “Foreign competition”. For Ukraine, the calculation yields a weight of 0.75 for the Domestic competition component and of 0.25 for the Foreign competition component. h. Variables 6.06 and 6.07 combine to form a single variable. i. The values of this variable are normalized. j. The size of the domestic market is constructed by taking the natural log of the sum of the gross domestic

product valued at PPP, plus the total value (PPP estimates) of imports of goods and services, minus the total value (PPP estimates) of exports of goods and services. Data are then normalized on a 1-to-7 scale. PPP estimates of imports and exports are obtained by taking the product of exports as a percentage of GDP and GDP valued at PPP. k. The size of the foreign market is estimated as the natural log of the total value (PPP estimates) of exports of goods and services, normalized on a 1-to-7 scale. PPP estimates of exports are obtained by taking the product of exports as a percentage of GDP and GDP valued at PPP.

1st pillar: Institutions 1.01 Property rights Property rights, including over financial assets (1 = are poorly defined and not protected by law, 7 = are clearly defined and well protected by law) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.02 Intellectual property protection Intellectual property protection in your region (1 = is weak and not enforced; 7 = is strong and enforced) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

1.12 Transparency of government policymaking Are firms in your region usually informed clearly by the government on changes in policies and regulations affecting your industry? (1 = never informed; 7 = always informed) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.13 Business costs of terrorism The threat of terrorism in your region (1 = imposes significant costs on business, 7 = does not impose significant costs on business) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

1.03 Diversion of public funds In your region diversion of public funds to companies, individuals, or groups due to corruption (1 = is common, 7 = never occurs)

1.14 Business costs of crime and violence The incidence of common crime and violence (e.g., street muggings, firms being looted) (1 = imposes significant costs on businesses, 7 = does not impose significant costs on businesses)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

1.04 Public trust of politicians Public trust in the financial honesty of politicians is (1 = very low, 7 = very high)

1.15 Organized crime Organized crime, such as mafia-oriented racketeering, extortion in your region (1 = imposes significant costs on businesses, 7 = does not impose significant costs on businesses)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.05 Irregular payments and bribes In your region, how common is it for firms to make undocumented extra payments or bribes connected with the following: a. Import and export permits? b. Public utilities (e.g., telephone or electricity)? c. Tax payments? d. Awarding of public contracts and licenses? e. Obtaining favorable judicial decisions? (1 = common, 7 = never occurs) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.06 Judicial independence Is the judiciary in your region independent from political influences of members of government, citizens, or firms? (1 = no – heavily influenced, 7 = yes – entirely independent)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.16 Reliability of police services Police services (1 = cannot be relied upon to protect businesses from criminals, 7 = can be relied upon to protect businesses from criminals) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.17 Ethical behavior of firms The corporate ethics (ethical behavior in interactions with public officials, politicians, and other enterprises) of firms in your region are (1 = among the world’s worst, 7 = among the best in the world) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.18 Strength of auditing and reporting standards In your country, how strong are financial auditing and reporting standards? (1 = extremely weak; 7 = extremely strong)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

1.07 Favoritism in decisions of government officials When deciding upon policies and contracts, government officials (1 = usually favor well-connected firms and individuals, 7 = are neutral)

1.19 Efficacy of corporate boards Corporate governance by investors and boards of directors in your region is characterized by (1 = management has little accountability, 7 = investors and boards exert strong supervision of management decisions)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

1.08 Wastefulness of government spending Public spending in your region (1 = is wasteful, 7 = provides necessary goods and services not provided by the market)

1.20 Protection of minority shareholders’ interests Interests of minority shareholders in your region are (1 = not protected by law and seldom recognized by majority shareholders, 7 = protected by law and actively enforced)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.09 Burden of government regulation Complying with administrative requirements (permits, regulations, reporting) issued by the government in your region is (1 = burdensome, 7 = not burdensome) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.10 Efficiency of legal framework in settling disputes How efficient is the legal framework in your region for private businesses in settling disputes? (1 = extremely inefficient, 7 = highly efficient) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.11 Efficiency of legal framework in challenging regulations How efficient is the legal framework in your region for private businesses in challenging the legality of government actions and/or regulations? (1 = Extremely inefficient, 7 = Highly efficient) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

Annex B. Ukrainian National Competitiveness Index 2013

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 1.21 Strength of investor protection* Strength of investor protection, 0–10 (best), 2012 Source: The World Bank, Doing Business 2013

2nd pillar: Infrastructure 2.01 Quality of overall infrastructure General infrastructure (transport, telephony and energy) in your region is (1 = underdeveloped, 7 = as extensive and efficient as the world’s best) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 2.02 Quality of roads Roads in your region are (1 = underdeveloped, 7 = extensive and efficient by international standards) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

2.03 Quality of railroad infrastructure Railroads in your region are (1 = underdeveloped, 7 = as extensive and efficient as the world’s best) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 2.04 Quality of port infrastructure Port facilities and inland waterways in your region are (1 = underdeveloped, 7 = as developed as the world’s best) * For landlocked regions, this measures the ease of access to port facilities and inland waterways. Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 2.05 Quality of air transport infrastructure Passenger air transport in your region is (1 = infrequent, limited, and inefficient, 7 = as frequent, extensive, and efficient as the world’s best) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 2.06 Available seat kilometers* Air transport passenger turnover in a region per week, million seat kilometers Source: State Aviation Service of Ukraine. Calculations: Foundation for Effective Governance 2.07 Quality of electricity supply The quality of electricity supply in your region (lack of interruptions and lack of voltage fluctuations) is (1 = worse than in most other countries, 7 = meets the highest standards in the world) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 2.08 Mobile telephone subscriptions* Mobile telephone subscribers per 100 population, 2012 Source: National Commission for Communications Regulation of Ukraine

2.09 Fixed telephone lines* Main telephone lines per 100 population, 2012 Source: National Commission for Communications Regulation of Ukraine

3rd pillar: Macroeconomic environment 3.01 Government budget balance* Central government gross surplus/deficit as a percentage of GDP, 2012 Source: IMF, Global Economic Prospects, 2013 3.02 Gross national savings* National savings rate as a percentage of GDP Source: IMF, Global Economic Prospects, 2013 3.03 Inflation* Annual percent change in consumer price index, 2012 Source: State Statistics Committee of Ukraine 3.04 General government debt* Government gross debt as a percentage of GDP, 2012 Source: IMF, Global Economic Prospects, 2013

4.04 Tuberculosis incidence* Number of tuberculosis cases per 100,000 population, 2012 Source: State Statistics Committee of Ukraine 4.05 Business impact of HIV/AIDS How serious do you consider the future impact of HIV/AIDS on your company in the next 5 years? (1 = extremely serious, 7 = not a problem) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 4.06 HIV prevalence* HIV prevalence as a percentage of adults aged 15-49 years, 2012 Source: Ukrainian Center for AIDS Prevention of the Ministry of Health of Ukraine 4.07 Infant mortality* Infant (children aged 0–12 months) mortality per 1,000 live births, 2012 Source: State Statistics Committee of Ukraine 4.08 Life expectancy* Life expectancy at birth (years), 2012 Source: State Statistics Committee of Ukraine 4.09 Quality of primary education Primary schools in your region are (1 = of poor quality, 7 = among the best in the world) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 4.10 Primary education enrollment* Net primary education enrollment rate, 2012 Source: State Statistics Committee of Ukraine

5th pillar: Higher education and training 5.01 Secondary education enrollment* Gross secondary education enrollment rate, 2012 Source: State Statistics Committee of Ukraine 5.01 Tertiary education enrollment* Gross tertiary education enrollment rate (18-23), 2012 Source: State Statistics Committee of Ukraine, Caclulation: Foundation for Effective Governance 5.03 Quality of the educational system The educational system in your region (1 = does not meet the needs of a competitive economy, 7 = meets the needs of a competitive economy) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 5.04 Quality of math and science education Math and science education in your region’s schools (1 = lag far behind most other countries, 7 = are among the best in the world) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

3.05 Country credit rating* Country credit rating, 2012

5.05 Quality of management schools Management or business schools in your region are (1 = limited or of poor quality, 7 = among the best in the world)

Source: World Economic Forum

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

4th pillar: Health and primary education

5.06 Internet access in schools Internet access in schools is (1 = very limited, 7 = extensive – most children have frequent access)

4.01 Business impact of malaria How serious do you consider the future impact of malaria on your company in the next 5 years? (1 = extremely serious, 7 = not a problem) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 4.02 Malaria incidence* Number of malaria cases per 100,000 population, 2012 Source: State Statistics Committee of Ukraine

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 5.07 Availability of research and training services In your region specialized research and training services are (1 = not available, 7 = available from world-class local institutions) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

4.03 Business impact of tuberculosis How serious do you consider the future impact of tuberculosis on your company in the next 5 years? (1 = extremely serious, 7 = not a problem)

5.08 Extent of staff training The general approach of companies in your region to human resources is (1 = to invest little in training and employee development, 7 = to invest heavily to attract, train, and retain employees)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

6.01 Intensity of local competition Competition in the local market is (1 = limited in most industries, 7 = intense in most industries) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

6.15 Degree of customer orientation Customer orientation: Firms in your region (1 = generally treat their customers badly, 7 = are highly responsive to customers and customer retention) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

6.02 Extent of market dominance Corporate activity in your region is (1 = dominated by a few business groups, 7 = spread among many firms)

6.16 Buyer sophistication Buyers in your region make purchasing decisions (1 = based solely on the lowest price, 7 = based on a sophisticated analysis of performance attributes)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

6.03 Effectiveness of anti-monopoly policy Anti-monopoly policy in your region is (1 = lax and not effective at promoting competition, 7 = effective and promotes competition) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.04 Effect of taxation on incentives to invest The level of taxes in your region (1 = significantly limits the incentives to invest, 7 = has little impact on the incentives to invest) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.05 Total tax rate* This variable is a combination of profit tax (% of profits), labor tax and contribution (% of profits), and other taxes (% of profits), 2012 Source: The World Bank, Doing Business 2013 6.06 Number of procedures required to start a business* Number of procedures required to start a business, 2012 Source: The World Bank, Doing Business 2013 6.07 Time required to start a business* Time required to start a business, 2013 Source: The World Bank, Doing Business 2013 6.08 Agricultural policy costs Agricultural policy in your region (1 = is excessively burdensome for the economy, 7 = balances the interests of taxpayers, consumers, and producers) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.09 Prevalence of trade barriers In your region, tariff and non-tariff barriers significantly reduce the ability of imported goods to compete in the domestic market (1 = strongly agree, 7 = strongly disagree) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.10 Trade-weighted tariff rate* The average rate of import tariff, 2012 Source: International Trade Centre 6.11 Prevalence of foreign ownership Foreign ownership of companies in your region is (1 = rare and limited, 7 = prevalent and encouraged) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.12 Business impact of rules on FDI In your region, rules governing foreign direct investment (1 = discourage foreign direct investment, 7 = encourage foreign direct investment) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.13 Burden of customs procedures Customs procedures (formalities regulating the entry and exit of merchandise) in your region are (1 = extremely slow and cumbersome, 7 = rapid and efficient) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 6.14 Imports as a percentage of GDP* Imports as a percentage of GDP Source: State Statistics Committee of Ukraine. Calculations: Foundation for Effective Governance

7th pillar: Labor market efficiency 7.01 Cooperation in labor-employer relations In your region, how would you characterize labor-employer relations? (1 = generally confrontational; 7 = generally cooperative)

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

6th pillar: Goods market efficiency

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.02 Flexibility of wage determination In your region, wages are (1 = set by a centralized bargaining process, 7 = up to each individual company) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.03 Hiring and firing practices The hiring and firing of workers is (1 = impeded by regulations, 7 = flexibly determined by employers) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.04 Redundancy costs, weeks of salary* Firing costs (in weeks of wages) Source: The World Bank, Doing Business 2013 7.05 Effect of taxation on incentives to work The level of taxes in your region (1 = significantly limits the incentives to work, 7 = has little impact on the incentives to work) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.06 Pay and productivity In your region, pay is (1 = not related to worker productivity, 7 = strongly related to worker productivity) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.07 Reliance on professional management Senior management positions in your region are (1 = usually held by relatives or friends without regard to merit, 7 = mostly held by professional managers chosen based for their superior qualification) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.08 Capacity to retain talent Does your region retain talented people? (1 = the best and brightest leave to pursue opportunities in other regions or countries; 7 = the best and brightest stay and pursue opportunities in the region) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.09 Capacity to attract talent Does your region attract talented people from other regions or abroad? (1 = not at all; 7 = attracts the best and brightest from other regions or abroad) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 7.10 Women in labor force* Female participation in the labor force as a percentage of male participation, 2012 Source: State Statistics Committee of Ukraine

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

8th pillar: Financial market development

9.07 Mobile broadband subscriptions* Mobile broadband subscriptions per 100 population, 2012

8.01 Availability of financial services The level of sophistication of financial markets in your region is (1 = poor by international standards, 7 = excellent by international standards)

Source: World Economic Forum

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.02 Affordability of financial services Does the financial sector in your region provide a wide variety of financial products and services to businesses? (1 = not at all, 7 = provides a wide variety) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.03 Financing through local equity market Raising money by issuing shares on the stock market in your region is (1 = impossible, 7 = very easy) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.04 Ease of access to loans How easy is it to obtain a bank loan in your region with only a good business plan and no collateral? (1 = impossible, 7 = very easy) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.05 Venture capital availability In your region, how easy is it for entrepreneurs with innovative but risky projects to find venture capital? (1 = impossible, 7 = very easy) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.06 Soundness of banks Banks in your region are (1 = insolvent and may require a government bailout, 7 = generally healthy with sound balance sheets)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.07 Regulation of securities exchanges Regulation of securities exchanges in your region is (1 = not transparent, ineffective and subject to undue influence from industry and government, 7 = transparent, effective and independent of undue influence from industry and government) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 8.08 Legal rights index* Strength of legal rights index on a 0–10 (best) scale Source: The World Bank, Doing Business 2013

9th pillar: Technological readiness 9.01 Availability of latest technologies In your region, the latest technologies are (1 = not widely available or used, 7 = widely available and used) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 9.02 Firm-level technology absorption Companies in your region are (1 = not able to absorb new technology, 7 = aggressive in absorbing new technology) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 9.03 FDI and technology transfer Foreign direct investment in your region (1 = brings little new technology, 7 = is an important source of new technology)

10th pillar: Market size 10.01 Domestic market size index* Sum of gross domestic product plus value of imports of goods and services, minus value of exports of goods and services, normalized on a 1–7 (best) scale Source: Calculations: Foundation for Effective governance. See Annex А 10.02 Foreign market size index* Value of exports of goods and services, normalized on a 1–7 (best) scale Source: Calculations: Foundation for Effective governance. See Annex А

11th pillar: Business sophistication 11.01 Local supplier quantity Local suppliers in your region are (1 = largely nonexistent, 7 = numerous and include the most important materials, components, equipment, and services) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.02 Local supplier quality The quality of local suppliers in your region is (1 = very poor, 7 = very good) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.03 State of cluster development In your region’s economy, well-developed and deep clusters are (1 = rare or absent, 7 = widespread in many fields) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.04 Control of international distribution Competitiveness of your region’s companies in international markets is primarily due to (1 = low-cost or local natural resources, 7 = unique products and processes) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.05 Value chain breadth Exporting companies in your region are (1 = primarily involved in individual steps of the value chain, e.g., resource extraction or production, 7 = present across the entire value chain, e.g., do not only produce but also perform product design, marketing sales, logistics and after-sales services) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.06 Control of international distribution International distribution and marketing from your region (1 = take place through foreign companies, 7 = are owned and controlled by local companies) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 11.07 Production process sophistication In your region, production processes use (1 = labor-intensive methods or previous generations of process technology, 7 = the world’s best and most efficient process technology) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

9.04 Internet users* Internet users per 100 population, 2012

11.08 Extent of marketing In your region, the extent of marketing is (1 = limited and primitive, 7 = extensive and employs the world’s most sophisticated tools and techniques)

Source: Gemius/GfK-Ukraine

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

9.05 Broadband Internet subscriptions* Broadband internet subscribers per 100 population, 2012

11.09 Willingness to delegate authority In your company, willingness to delegate authority to subordinates is (1 = low –  top management controls all important decisions, 7 = high – authority is mostly delegated to business unit heads and other lower-level managers)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

Source: IKS-consulting 9.06 Internet bandwidth* Internet bandwidth, kb/s per capita, 2012 Source: International Telecommunications Unit

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

12.01 Capacity for innovation In your region, companies obtain technology (1 = exclusively from licensing or imitating foreign companies, 7 = by conducting formal research and pioneering their own new products and processes) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 12.02 Quality of scientific research institutions Scientific research institutions in your region (e.g., university laboratories, government laboratories) are (1 = nonexistent, 7 = the best in their fields internationally) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 12.03 Company spending on R&D Companies in your region (1 = do not spend money on research and development, 7 = spend heavily on research and development relative to international peers) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 12.04 University-industry collaboration in R&D In the area of R&D, collaboration between the business community and local universities is (1 = minimal or nonexistent, 7 = intensive and ongoing) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 12.05 Gov’t procurement of advanced tech products In your region, government procurement decisions result in technological innovation (1 = strongly disagree, 7 = strongly agree)

Prevalence of automatic control systems, such as – ERP, CRM and so on Your company has implemented and is currently using automatic control systems, such as – ERP, CRM and so on: (1 = automatic control systems are not used, 7 = business processes are completely automatized) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Frequency of attraction of external consultants (such as strategy, marketing, IT) Your company attracts external consultants for its operations (such as strategy, marketing, IT): (1 = external consultants have never been engaged, 7 = external consultants have been engaged on a regular basis) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Prevalence of complex analysis using modern technologies for business planning Business planning in your company: (1 =based on own intuition and experience, 7 = based on complex analysis using modern technologies) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Prevalence of international standards of quality control (for example, ISO 9000) Your company has implemented and is currently using international standards of quality control (for example, ISO 9000): (1 = quality control systems are not used, 7 = all business processes are certified) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Ease of finding the necessary specialists to business In your region is it easy to find the necessary specialists to business? (1 = it is extremely difficult, 7 = very easy) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

12.06 Availability of scientists and engineers Scientists and engineers in your region are (1 = nonexistent or rare, 7 = widely available)

Equality in salaries of women and men performing the same job In your region are women’s salaries similar to the salaries of men performing the same job? (1 = they are not similar – women are paid significantly less than men, 7 = they are exactly the same – women are paid the same as men)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

12.07 Utility patents granted* Number of utility patents (i.e., patents for invention) granted by the Patents Co-operations Treaty, per million population, 2012

Equality of women’s and men’s opportunities to move up the career ladder To what extent do business in your area provides women the same opportunities as men to move up the career ladder? (1 = women have little or no opportunity to move up the career ladder, 7 = women and men have equal opportunities to advance the ladder)

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

Source: World Intellectual Property Organization and the Organisation for Economic Co-operation and Development (OECD), State Statistics Committee of Ukraine. Calculations: Foundation for Effective Governance

Additional questions for article Abilities to adapt to external shocks How do you evaluate your company’s ability to adapt to external shocks? (for example, crisis, extreme and crucial changes in the legislation)? (1 = extremely low, 7 = very high) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 5 years dynamics of expenses on modernisation of fixed assets For the last 5 years how did expenses on modernisation of fixed assets change in your company? (1 = considerably shortened, 7 = considerably increased) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Sophistication of procurement system (strategic alliances with suppliers, risk management, quality standards, etc.) How developed system of procurement have businesses in your region (strategic alliances with suppliers, risk management, quality standards, etc.)? (1 = completely undeveloped, 7 = well developed) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Variety of non-financial incentives in motivation system Motivation system in your company: (1 = limited by material remuneration only, 7 = contains various non-financial incentives) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Prevalence of e-document flow in companies How widely is e-document flow used in your company?: (1 = isn’t used at all, 7 = used all over with specific e-document flow systems) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

CHAPTER 1. The Global Competitiveness Index 2013: Sustaining Growth, Building Resilience

12th pillar: Innovation

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Compliance with the agreements of business partners/contractors During last 5 years how often did your business partners/contractors not fulfill their commitments? (1 = many times, 7 = no cases) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Importance of reputation among businesses How is reputation important for your business?: (1 = doesn’t matter, 8 = the main asset) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Extent of spendings on social events: a. Internal projects: social programs for employees; b. Spatial development projects (in a town or area of business presence): infrastructure, ecology; c. Community development projects: health and sport, education and culture, social care Does your company spend money on social events? a. Internal projects: social programs for employees b. Spatial development projects (in a town or area of business presence): infrastructure, ecology c. Community development projects: health and sport, education and culture, social care (1 = doesn’t spend at all, 7 = spends significant amounts of money on a regular basis) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013 Long-term initiatives to support local communities Does your company participate in long-term initiatives to support local communities (1 = never participates, 7 = participates very actively as initiator) Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

Measuring Competitiveness of Ukraine’s Regions in 2013

For the third year in a row, the Foundation for Effective Governance has been analyzing competitiveness of 27 Ukrainian regions using the methodology of the WEF’s Global Competitiveness Index. The survey gives the opportunity to see the changes in the regions’ performance and identify the trends of their development. Analysis of regions’ competitive advantages and barriers to their development can be used for making strategic decisions that will contribute to improvement of standards of life in the regions and help to choose the right place for doing business. Ukrainian National Competitiveness Index 2013 has been calculated using the statistics data 2011-2012 as well as the results of the Executive Opinion Survey carried out from January to May 2013.

Over the last three years all the regions have improved their scores in national ranking

Over three years the overall regional index has increased by 0.14 points, from 3.87 to 4.01. In 2011 the average national score corresponded to 96th place out of 142 countries (performing at the level of Serbia and Mongolia), while this year the national average score corresponds to 88th place out of 148 countries in the global ranking (at the level of Cambodia, between Bosnia and Moldova). Over the last three years several Ukrainian regions have move up in the national ranking showing significant improvement in the performance: AR Crimea (up 11 places), Khmelnytsky Oblast (up 7 places), Odesa and Rivne oblasts (up 5 places). At the same time there are some oblasts where the situation has deteriorated: Luhansk and Mykolayiv oblasts (down 8 places) and Volyn Oblast (down 5 places).

Over the last three years AR Crimea has moved up by 11 places, Khmelnytsky Oblast – up 7 places and Odesa and Rivne – up 5 places 2013 sees changes in the top five regions. Odesa Oblast appears in the top five ranking 3rd, ahead of Donetsk and Dnipropetrovsk oblasts. As a result Kyiv Oblast drops out of the national ranking. Thus, this year’s top five regions include: Kyiv City, Kharkiv, Odesa, Donetsk and Dnipropetrovsk oblasts. There are also changes in the bottom half of the ranking. This year Kherson Oblast improves its positions overtaking Kirovohrad Oblast which is ranked a rock bottom 27th place in the national ranking. The five worst performing regions are in fact the same as last year: Chernihiv, Ternopil, Zhytomyr, Kherson and Kirovohrad oblasts.

Over the last three years Luhansk and Mykolayiv Oblasts have lost 8 positions and Volyn Oblast drops 5 places in the ranking In global comparison, the leading Ukrainian region (Kyiv City) is assessed at 51st place out of 148 countries, being placed at the level of Latvia, Kazakhstan and Italy.

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

CHAPTER 2

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

Table 2.1

Average results of Ukrainian regions in the Ukrainian National Competitiveness Index and across the pillars over the last three years 2011

2012

2013

Global Competitiveness Index

3.87

4.00

4.01 ↑

Institutions

3.69

3.77

3.83 ↑

Infrastructure

3.77

3.81

3.90 ↑

Macroeconomic environment

4.03

4.52

4.20 ↓

Health and primary education

5.75

5.76

5.75 ↓

Higher education and training

4.45

4.49

4.55 ↑

Goods market efficiency

3.79

3.94

4.12 ↑

Labor market efficiency

4.77

4.78

4.63 ↓

Financial market development

3.83

4.00

4.12 ↑

Technological readiness

2.95

3.10

3.11 ↑

Market size

1.91

2.10

2.21 ↑

Business sophistication

3.81

3.89

3.96 ↑

Innovation

2.91

2.99

3.04 ↑

Source: Ukrainian National Competitiveness Index, 2011 -2013

30 The outsider – Kirovohrad Oblast – ranks 99th globally, close to Nicaragua and Salvador.

Kyiv City’s index corresponds to 51st place globally out of 148 countries, at the level of Latvia, Kazakhstan and Italy In 2013 thirteen Ukrainian regions have worsened their performance in the national ranking year-on-year, seven regions improved and other seven retained their positions. The average competitiveness index of Ukraine makes 4.01 points, up 0.01 point since last year. Ukrainian regions have improved their average scores across nine pillars of competitiveness compared with last year. The average scores of regions deteriorate most notably in two areas: macroeconomic environment and labor market efficiency.

In 2013 we see a narrower gap between the regions in the institutions pillar

The regional disparity has become slightly wider. The disparity between the best and the worst performers increases by 0.01 points to 0.56. In global comparison, last year the difference between them made 46 places, while this year it makes 48 places. At the same time, the disparity between the best and the worst performers decreases from 0.71 to 0.54. Also we see that the disparity in goods market efficiency and business sophistication pillars has decreased. On the other hand regions show wider disparity in higher education and training and technological readiness.

As usual, the best performers are large regions with a well-developed infrastructure, good system of higher education, high level of technological readiness, well-developed business and good infrastructure for innovations

The regions show very uneven performance in the infrastructure pillar (the difference is about 2 points), technological readiness (1.6), higher education and training (1.2), and innovations (1.2). As usual, they are very much different in terms of market size. On the other hand, the disparity between the regions in terms of health and primary education, goods and labor market efficiency, financial market development and business sophistication is getting narrower.

The regions in the bottom of the ranking have relatively good scores in such pillars as institutions, health and primary education and labor market efficiency

Poor institutional framework has always been a weakness of Ukraine and constrained its competitive development. Ukraine’s average in the institutions pillar is 3.83 points, which is below the global average (3.98). At the same time Ukraine outperforms the Central and Eastern Europe (CEE; 3.75) and CIS (3.59). The poor functioning institutional environment has always been a problem for the leading regions. For the third year in a row, Kyiv City ranks in the bottom of the national ranking in this dimension (104th place out of 148 countries in the global ranking, at the level of Cote d’Ivore). Khmelnytsky Oblast is the best performer in the institutions pillar. It ranks at the level of Georgia or 68th place globally. Still, it is not good enough to be called a competitive advantage of the region. At the same time some aspects of institutional framework receive good assessment in global comparison. Thus, Khmelnytsky Oblast can boast its transparency of government policymaking (the best score among the regions). It ranks 15th globally, at the level of Canada and Japan. Also, business executives believe that Ukraine has very low business costs of terrorism in global comparison. Kirovohrad Oblast ranks 6th globally in this sub-pillar, at the level of Iceland. Due to high concentration of large businesses Donetsk Oblast shows very good performance in efficacy of corporate boards. It performs better than Switzerland, Canada and the USA (11th globally). Still, there are some common challenges for all the regions. First of all they include low level of protection of minority shareholders’ interests. The best performer in this indicator is Khmelnytsky region which ranks 96th globally, while the outsider (Cherkasy Oblast) ranks 143rd out of 148 countries, at the level of Mauritania and Burundi.

Donetsk Oblast scores higher than Switzerland, Canada and the United States for efficacy of corporate boards, matching 11th place in the GCI of 148 nations Infrastructure remains a competitive advantage of Ukrainian capital both in national and international

Performance of Ukrainian regions across 12 pillars of competitiveness in 2013 Regions’ average Worst region

Best region

Worst country Ukrainian National Competitiveness Index 2013

Best country 2.86

Institutions

3.83

2.27

Infrastructure

4.40

3.46

1.71

5.67

4.00

6.10

3.31

Macroeconomic environment

5.12

2.55

Health and primary education

4.20

7.00

2.58

4.20

2.03

Higher education and training

2.82

Labor market efficiency

2.85 2.26 2.78

Market size 1.30

5.28 4.01

4.42

2.03

Technological readiness

4.08

4.20 6.27 5.59

4.26

5.77

4.80

6.02

4.38

6.22

3.71

Business sophistication Innovation

2.80 2.12

2.67

3.79 3.60

6.82

5.97

5.52

Goods market efficiency

Financial market development

6.74

6.94 4.25

5.75

5.79 7

Source: Ukrainian National Competitiveness Index, 2013

comparison: in 2013 Kyiv has exceeded Ukraine’s average even more – by 30%, with the score corresponding to 32nd spot globally. Ternopil in the worst performer in the pillar: the region receives 3.31 points, at the level of Romania and Albania at 101st. Ukraine’s infrastructure average score (3.90) approximates that of the CIS (3.91) and the world (3.93). At the same time, Ukrainian regions are somewhat behind the countries of Central and Eastern Europe (3.99). Infrastructure development varies by region. On the other hand, all Oblasts receive high assessment of the quality of railroad infrastructure and low score for the quality of the quality of roads, port infrastructure and air transport infrastructure. For example, Kharkiv would take 11th position in the world by the quality of railroad infrastructure, performing at the level of the Netherlands.

All Regions receive high assessment of the quality of railroad infrastructure and low score for the quality of roads, port infrastructure and air transport infrastructure

Health and primary education has been the strongest pillar of the country’s competitiveness for three years running. This year all regions have scored above the global average, showing little gap between each other. Executives give the highest score for performance in the pillar to Kyiv Oblast and a number of regions from western

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

Figure 2.1

Ukraine: Chernivtsi, Zakarpattya and Ternopil. Kyiv Oblast’s score (5.97) matches 48th place in the GCI, at the level of the Middle Eastern countries like Oman, Tunisia and the UAE. Agricultural Kirovohrad and Sumy as well as industrial Zaporizhzhya and Dnipropetrovsk are the worst performers. Kirovohrad’s score of 5.52 corresponds to 81th position in the world (Thailand and Morocco). Some dimensions of the pillar are problematic for all regions. Ukraine’s average of HIV prevalence matches 78th position among 148 countries, quite comparable with the performance of France, Italy and Switzerland. Dnipropetrovsk, however, ranks at the very bottom of Ukrainian National Competitiveness Report and 112th in the GCI. Ukrainian regions are also laggards in terms of tuberculosis incidence; the national average is at the level of Sri Lanka (88th). Kherson has the highest rate of tuberculosis incidence, matching 110th spot globally. Ukrainian Oblasts rank relatively high on higher education and training. This advantage is traditionally attributed to quantitative indicators of secondary and tertiary enrollment rates. The quality of management schools and extent of staff training are of concern in all regions. Executives believe the best business schools are in Kyiv, though the city performs at the level of 100th position in the world. Donetsk, the national top performer in the extent of staff training, would take only 118th place among 148 countries. The gap in the pillar between regions has increased a little year on year. In global comparison, the

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

Figure 2.2

Ukraine’s average scores in 2013 benchmarked against CEE and CIS Ukrainian National Competitiveness Index 2013

4.0 4.1 4.2

Institutions

3.8 3.6 3.8

Infrastructure

3.9 3.9 4.0

Macroeconomic environment

4.2 5.1 4.7

Health and primary education

5.8 5.5 5.9

Higher education and training

4.6 4.2 4.5

Goods market efficiency

4.1 4.1 4.2

Labor market efficiency

4.6 4.4 4.2

Financial market development

4.1 3.7 4.0

Technological readiness

3.1 3.7 4.2

Market size

2.2 3.6 3.7

Business sophistication

4.0 3.6 3.8

Innovation

3.0 2.9 3.2

Regions’ average CIS Central and Eastern Europe 2

Source: Ukrainian National Competitiveness Index 2013

gap between the top-ranked and bottom-ranked regions is 60 places. Ukraine’s best performers, Kharkiv, Kyiv city and Odesa, receive the highest assessment: 5.28, 5.16 and 4.96 respectively. The Ukrainian leaders would take high 21st (Japan) and 37th (Lithuania) places in the GCI. Kirovohrad, Zakarpattya and Chernihiv round up the national ranking in the higher education and training pillar. Kirovohrad’s score of 4.08 corresponds to 81st position in the GCI. Nevertheless, the national average exceeds the average results of the world, CIS and CEE.

Regions’ high scores for higher education and training are traditionally attributed to the quantitative indicators of the secondary and tertiary enrollment rates.

The quality of education and on-the-job training

remain very low

In Ukraine, goods market efficiency is assessed traditionally low, with the average score (4.12) being below that of the world (4.24) and CEE (4.19). At the same time, Ukraine outperforms the CIS on average (4.08) in the pillar. This year Odesa (4.26) tops the national ranking yet would take only 72nd position in the GCI (Portugal). The worst performer is Ternopil (4.01), at the level of 101st spot globally.

The weakest indicators of goods market efficiency pillar are low prevalence of foreign ownership, intensity of local competition and burden of customs procedures

In particular, Kyiv shows the highest prevalence of foreign ownership, yet the result corresponds only to 114th position among 148 nations, while Kirovohrad’s score is low both in the national and international comparison. Chernihiv, the outsider in terms of intensity of local competition, would rank 132nd globally. On the contrary, labor market efficiency is high throughout Ukraine. The score of Ukraine’s worst performer is still above the world or CEE average. The performance is partly down to quite flexible labor laws in Ukraine. In 2013, Khmelnytsky has received the highest score of 4.80, matching those of Japan (23rd) and Barbados (24th). Kherson is the worst performer with 4.42, though the result is high in the global ranking (56th). Brain drain is the biggest concern in the pillar across Ukraine. Despite Kyiv’s high capacity to attract talent from abroad and other Ukrainian regions (1st in Ukraine and 31st in the world), its capacity to retain talent (1st in the national ranking) is only at the level of 90th position in the GCI. Zaporizhzhya, which receives the lowest assessment of this indicator, would take a very low 139th place among 148 countries, at the level of Mauritania and Nepal.

7 12 9

8 15 3

5 14 24 20 23 16 21 13 10 22 17 18 11 27 26 19 25

3rd pillar: Macroeconomic environment

4th pillar: Health and primary education

14 15 11 19 26 6

1 24 10 16 12 8

Subindex B: Efficiency enhancers

5th pillar: Higher education and training

7 21 4 12 6 22 11 17 9 19 23 24 13 14 26 10 15 25 16 20 18 27

6th pillar: Goods market efficiency

1 14 17 23 8 21 12 20 15 10 2

7th pillar: Labor market efficiency

3 13 19 16 10 12 23 22 20 26 6

8th pillar: Financial market development

24 4 23 5

6 13 15 9

9th pillar: Technological readiness

6 18 24 15 10 14 21 16 19 11 12 7

10th pillar: Market size

Subindex C: Innovation and sophistication factors

1 14 2

9 20 10 23 4 11 12 18 8

6 13 19 21 16 25 15 7 26 24 27 17 22

3 21 19 6 20 16 5 13 15 4

7 14 18 8 23 26 17 10 24 25 27 12 22

11th pillar: Business sophistication

11 2

12th pillar: Innovation

1 14 2

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

9 19 22 21 17 18 20 10 13 23 8 11 24 27 25 26

1 1

9 15 2 1

5 18 13 3 16 6 10 11 12 19 8 1

7 25 5 18 9 13 23 3 17 2 22 4 21 20 27

9 22 18 12 11 10 15 17 16 13 21 19 14 24 23 25 20 26 27

3 21 17 2

6 16 13 4 25 19 7 18 3 24 27 11 26 22

1 18 4 7

9 11 21 17 25 15 2 14 5 27 24

1 20 14 8 12 27 11 22 18 10 16 19 25 26 8 13 9 27 17 23 25 22 20 26

4 10 9 27 11 22 17 16 12 13 20 15 18 14 8 26 21 25 19 24 23

6 20 15 21 4 16 11 19 10 7 12 18 25 9 24 13 8 26 23 27 22 17

Source: Ukrainian National Competitiveness Index 2013

Financial market development still shows a small difference among Ukraine’s regions. The average value in the pillar is higher than that in the world, the CIS and CEE. Sumy receives the highest score in financial market development (4.26) that corresponds to 56th spot globally. Mykolayiv scores the worst (3.92) – at the level of 75th position in the GCI. Despite relatively high general scores in the pillar, the regions perform low in a range of indicators. In particular, most oblasts get bad scores for venture capital availability. Zaporizhzhya tops the national report by venture capital availability but its place corresponds only to 98th position in international comparison. Sumy demonstrates the lowest score, which is at the level of 134th place globally. Technological readiness is a pillar with a big gap between regions of more than 1.5 points  –  slightly bigger year on year. Leaders of Ukrainian National Competitiveness Report perform better than others in technological readiness. Unchallenged leadership of Kyiv in Ukraine (the gap from the second place is almost one point) looks less optimistic in the global comparison where the city could take 46th position (Croatia and Hungary). Luhansk is the outsider (2.78) performing at the level of 121st position in the global index (Bolivia).

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013

Kirovohrad

Kherson

27 20 26 17 23 21 14 22 7 24 25 4

2nd pillar: Infrastructure

Zhytomyr

1st pillar: Institutions

Ternopil

7 16 14 5 15 12 4

Chernihiv

Chernivtsi

Luhansk

Zakarpattya

Subindex A: Basic requirements

Mykolayiv

Cherkasy

Volyn

Vinnytsya

Zaporizhzhya

Sumy

Kyiv Oblast

Khmelnytsky

Lviv

Rivne

Dnipropetrovsk

AR Crimea

Donetsk

Sevastopol

Odesa

Ukrainian National Competitiveness Index 2013

Poltava

Kharkiv

Ivano-Frankivsk

Ukrainian regions’ performance 2013 in twelve competitiveness pillars

Kyiv

Table 2.2

The average score of regions signals that technological readiness in Ukrainian oblasts is lower than on average in the world, CEE and CIS All regions receive poor scores for availability of latest technologies: even the leader, Donetsk, could take only 111th place globally, while the outsider – Chernihiv – is the worst performer in the world. Regions also lag behind by FDI and technology transfer being among underachievers in the global index. The market size pillar demonstrates the biggest difference between regions, which is explained by objective factors as the economic activities are concentrated in several oblasts. The most competitive regions that also have the biggest domestic and foreign markets lead the ranking with Kyiv on top.

Kyiv’s market size is comparable with the 66th economy in the Global Competitiveness Index On average, the markets of Ukrainian regions are not big. The national average (2.21) is much lower than the average market size in the world and groups of countries.

Donetsk has ranked as an undisputable Ukrainian leader by business sophistication for the second year

Chapter 2. Measuring Competitiveness of Ukraine’s Regions in 2013 34

By business sophistication, Ukrainian oblasts are below the average global index, yet their average score are above that of the CIS and CEE. The difference between regions is small, not exceeding half a point. The regions leading the national report have high scores in the pillar. Donetsk has ranked as an undisputable Ukrainian leader by business sophistication for the second year, delivering a strong performance globally as well (53rd) – at the level of Estonia, Chile or Mexico. Poland, for example, takes 65th place, and Russia, 107th. Zhytomyr rounds up the pillar (3.79; 89th globally). A narrow value chain and poor production process sophistication restrict the growth of regions on the business sophistication pillar. Ukrainian regions have performed poorly on innovation over the past years with the average score of 3.04 out of 7, which puts them in the bottom half of the ranking (91st place at the level of Cambodia and Uganda). The gap between regions is big – around a point. The best (Kharkiv, 3.60) and worst (Zhytomyr, 2.67) performers have 84 spots between them in the global index. Kharkiv could be in top 50 countries on innovation, while Zhytomyr’s place corresponds to 128th position (Georgia, Zimbabwe and Mozambique). The region performs the worst in Ukraine in the quality of scientific research institutions and availability of scientists and engineers. By both dimensions the oblast is in last 10 of the global index. PCT patent applications and company spending on R&D are the most critical indicators restricting increase of regions’ innovation scores.

Assessment methodology The World Economic Forum continues to improve the GCI methodology to make the comparison of countries more objective and meet the latest international trends. This year the index has seen a number of changes, not dramatic though. Favoritism in decisions of government officials was excluded from the pillar of institutions. Two others indicators were divided into two. The “effect of taxation” was divided into “effect of taxation on incentives to invest” and “effect of taxation on incentives to work”. The “brain drain” was divided into the capacity to retain talent and attract talent.

Executive Opinion Survey According to the WEF methodology, the findings of executive opinion surveys account for two-thirds in the calculations of the global competitiveness index. The same ratio is kept for the Ukrainian National Competitiveness Index. As in 2012, over two thousand business executives in 24 oblasts of Ukraine, AR Crimea, Kyiv and Sevastopol shared their views on the national ranking this year. The sample size for each region was determined based on the region’s share in national GDP, total number of employees across the country and total industrial output. Thus, the overall number of respondents in each region varied from 53 to 126 people. Within a specific region, respondents were categorized according to two pools: industry and size (headcount). The industry pools took into account the structure of the regional economy (shares in regional GRP and employment). The size-based pools were developed for three categories of companies: under 50 people, 51-250 people and over 250

people. The main method of information collection was a telephone interview with company executives in Ukraine’s oblasts. The number of interviews carried out from January 2013 to May 2013 totaled 2,080: 1,910 interviews with non-financial sector companies and 170 with financial sector companies.

Level of business development is not sufficient for successful competition

The Global Competitiveness Report 2013 suggests that Ukraine’s economy is insufficiently competitive on a global scale. Last year, the Ukrainian National Competitiveness Report highlighted the country’s largest concern as institutions, focusing on the efficiency of public institutions. Not everything depends on the government and its economic intervention  –  the role and responsibility of the business should not be underestimated. Corruption is triggered by tacit consent of businesses’ to work with underhand schemes; the workforce is not highly skilled as the companies are reluctant to invest in employee development, and the market competitiveness is not perfect as not all players seek a fair and open play. There are barriers in raising external capital, because business reporting standards and transparency are not ideal, advanced technologies are not widely spread since businesses are very often not prepared to adopt them both from perspective of their mindset and technology, etc. Report 2013 looks into the soft and hard factors which drive business sophistication in a move to see how committed and capable businesses are in their contribution to the country’s competitiveness growth.

Soft factors include those which are primarily based on engagement with people and communities, whilst hard factors are, first of all, focused on the use of technologies

Below are the factors which drive business sophistication and can be compared against indicators of the Global Competitiveness Index; business adaptability and corporate governance, corporate ethics, corporate social responsibility and HR policies, innovations and business processes, and corporate finance. Division of the factors that shape the country’s competitiveness via the government-driven and businessdriven is quite reasonable. Firstly, this is a typical division into macro and micro levels in the economy. Moreover WEF’s Global Risks Report 2013 concludes this is particularly important now as the global economy has not fully recovered, and the situation will remain fragile in the near future. Lloyd’s Risk Index 2013 also divides the key risks of the global economy into two levels: regulatory risks (high taxation and excessively strict legislation) and economic risks (loss of customers, cost and availability of credit and price of material inputs). Such approach is vitally important for Ukraine where the economy started to cool down and move to the risk zone in 2012-2013. Emerging Markets Opportunity Index 2012 put Ukraine only at 25th position out of 27. Calculated by Grant Thornton, the index is based on the size and growth forecasts of the economies. The Failed States Index 2012 by The Fund for Peace categorized Ukraine as “warning”, ranking it 113th among 177 nations. The index is guided by social, economic and political indicators. In 2013, the world’s leading rating agencies, Fitch, Moody’s and S&P, have downgraded the country’s outlooks and ratings. Finally, current country risk classification, assigned by the OECD, has remained critical for Ukraine in 2013 (score of 7, the same as during the crisis years of the late 1990’s and 2000’s).

CHAPTER 3. Level of business development is not sufficient for successful competition

Chapter 3

CHAPTER 3. Level of business development is not sufficient for successful competition 36

This Report deeply explores business sophistication factors to realize the degree to which Ukraine is ready to face current challenges and risks, notably at the level of businesses, which also determines its ability to face them without any special support from the government. The survey has shown that domestic business is underdeveloped to compete successfully in the global economy. In some cases, the performance of Oblasts and industries corresponds to the bottom positions in the global ranking, while it lags behind key peers in most cases.

For the purpose of this Report, peers are former republics of the USSR, post-Socialist nations and sometimes emerging markets comparable with Ukraine in terms of their size and other parameters, for example, Turkey In addition, GCI 2013-2014 and Ukrainian National Competitiveness Report 2013 show a downward trend in many indicators of business sophistication factors in the country. We will elaborate on the issue below.

3.1 Adaptability UKRAINIAN BUSINESSES HAVE LOW ADAPTABILITY CAPACITIES How prepared are the Ukrainian economy and business to face global and country-specific risks? Risk Management Effectiveness ranking is based on the Global Risks Perception Survey conducted in fall 2012 by the World Economic Forum among respondents of the GCI’s Executive Opinion Survey. Ukraine is amongst the worst performers, ranking 119th out of 139 nations. Table 3.1

Risk management effectiveness in companies in Ukraine and peer countries

Rank

Country

Score

Poland

3.87

Russia

3.60

Slovak Republic

3.11

103

Hungary

3.03 2.93

113

Moldova

119

Ukraine

2.65

123

Romania

2.53

Source: World Economic Forum, Global Risks, 2013.

Similarly, Ukraine scores low (2.54) in “resilience”, which defines the ability of a country to adapt and recover from global risks (Poland and Russia gain 2.86 and 2.84 respectively). Executive Opinion Survey 2013 conducted by the Foundation for Effective Governance according to the WEF’s methodology reveals that business adaptability is explored in the question “How do you assess the ability of your organization to adapt to external shocks (crises, etc.)?” The responses manifest the spread on aggregated score by Oblasts of almost one point (on a 7-point grading scale), which is big by global standards. It is hard to correlate the findings with the overall competitiveness index. For example, Rivne (4.60), Zakarpattya (4.45) and Kharkiv (4.38) appear to be the leaders in business adaptability, while Poltava (3.75), Donetsk (3.70) and Sumy (3.68) are among outsiders. The Survey finds that business adaptability is lower in resource-based industries: mining (3.55), construction (3.76), electricity, gas and water production (3.87) as well as agriculture (3.90). Services sectors however perform highly in adaptability: trade (4.13), hotels and restaurants

(4.18), insurance (4.54) and banking (5.01). Small and big businesses earn approximately the same average scores (4.07 and 4.08 respectively), while medium-sized companies perform slightly worse (3.97). Technological readiness and adaptability help to evaluate risk preparedness of the economy (Figure 3.1). Changes over the past years show a significant increase in Ukraine’s scores for technological readiness indicators. In two of them, the country climbed up nearly 20 places in the global ranking, but in 2013 the country has fallen in the ranks again achieving its lowest position for several years. Production process sophistication has seen the largest drop: scores in 2013 are approximately the same as in 2009-12 yet the country has lost nearly 10 spots in the GCI. After the global crisis, many countries adopted the latest technologies much more extensively, a fact proven by other indices. In the Globalization Index 2012 (by EY) Ukraine ranks 47th by the degree of globalization (out of 60 economies, with Turkey at 46th and Russia at 48th). Technology is the country’s weakest pillar. Its score of 2.2 points is nearly 4 times smaller than the score gained by the ranking’s leader, Hong Kong. The technology’s aggregated score across the countries has increased approximately 1 score over the decade, with the growth projection for 4 years being another 0.5 points. Knowledge Economy Index 2012 developed by the World Bank places Ukraine at 56th position (Russia at 55th), which is 2 places down from Ukraine’s performance in 2000. Although Ukraine still matches the peers, the technology gap from the top-performing economies is increasing. Moreover, technological readiness varies by Oblast in Ukraine – the country has a noticeable technology gap between oblasts. Figure 3.2 indicates the gap in the availability of the latest technologies and firm-level technology absorption is about 1 score between the Oblasts. In international comparison, this represents a gap of 35 nations and 55 nations in the GCI respectively. Ukraine’s worst performers in the availability of the latest technologies would take the very bottom place in the global ranking, whilst the outsiders in the technology absorption would feature in the bottom 10 of the GCI. Even the country’s top performers would rank in the bottom half of the global list. Availability of the latest technologies by sector receives the lowest assessment from representatives of the

5.0

GCI, scores

4.5 Firm-level technology absorption Availability of latest technologies Production process sophistication

4.0

3.5

3.0

2008

2009

2010

2011

2012

2013

Source: World Economic Forum, The Global Competitiveness Report, 2008-2013.

industry – electricity, gas and water companies (3.42), manufacturing (3.45) and mining industry (3.64) – as well as trade (3.52), transport and communications (3.63). Investment and insurance companies as well as hotels and restaurants receive the highest scores: 4.60, 4.02 and 4.14 respectively. Executives in the industries  –  mining (3.97), manufacturing (4.15) and production and distribution of electricity, gas and water (4.02) – as well as hotels and restaurants sector (4.14) are critical about the firm-level technology absorption. At the same time, the highest scores come from investment and agricultural firms (4.73 each) as well as banking and construction (4.59 each). Unlike the availability of the latest technologies where the assessment does not vary greatly by the size of a business, the absorption of new technologies demonstrates direct dependence; the medium-sized organizations tend to absorb the latest technologies more extensively than small businesses (4.34 vs. 4.21), whilst large companies show even more progress (4.60). At the same time, the medium-sized firms upgrade their capital goods more actively. When asked whether investment in fixed assets modernization grew, the executives from medium-sized companies gave the highest assessment – 4.57, which is 0.2 and 0.4 points above the scores given in general by representatives of large and small firms respectively. The Executive Opinion Survey 2013 suggests, if broken down by sector, the investment in fixed assets modernization have grown in agriculture (4.78), banking (4.77), hotels and restaurants (4.43) and trade (4.42). Figure 3.2

Technological readiness indicators of Ukrainian regions and global economies Regions’ average Worst region

Best region

Worst country Availability of latest technologies

2.50

Firm-level technology absorption

2.70

Best country 3.06

4.21 Donetsk 3.85

4.72 Donetsk

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

6.50 6.20 7

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.1

Investment and construction companies, the most affected by the financial crunch, give the lowest scores: 3.63 and 3.50 respectively. The smallest regions  –  Volyn (4.73), Chernivtsi (4.61) and Sevastopol (4.65) – are amongst the leaders in upgrading the fixed assets. Larger regions gain the lowest scores: 3.99 for Crimea, 3.87 for Kyiv city and 3.86 for Zaporizhzhya. Incidentally, the State Statistics Service reported in 2012 that Zaporizhzhya Oblast and Kyiv city were among clear outsiders in terms of capital investment gains, while Volyn was among top performers. Greater sophistication of production processes results partly from the absorption of new technologies and upgrade of facilities. When asked whether production processes in the Oblast were modern, managers gave higher assessments both in large agro-industrial Oblasts (3.70 in Poltava and 3.81 in Kharkiv) and in smaller Oblasts (3.72 in Chernivtsi, 3.73 in Rivne and 3.99 in Vinnytsya). AR Crimea, Kirovohrad and Luhansk are amid Ukraine’s worst performers, receiving 3.02, 3.14 and 2.93 respectively. If broken down by sector, production process sophistication is higher in banks (3.58 points), agricultural firms (3.73), hotels and restaurants (3.91) and lower in electricity, gas and water companies (3.21) as well as mining enterprises (3.26) where depreciation of fixed assets is high. The country’s adaptability and technology gaps from the leading economies are hard to bridge despite efforts of Ukrainian businesses to adapt its business processes to the modern environment and relatively good scores for adaptability in some Oblasts and sectors (including those, which are not obvious forerunners in terms of competitiveness).

Changes in particular metrics of Ukraine’s technological readiness and business sophistication in the GCI

CHAPTER 3. Level of business development is not sufficient for successful competition 38

3.2 Corporate governance Depending on the corporate governance sophistication, the management quality, amongst other factors, shapes the ability of the business to develop and adapt to the changing environment.

Corporate governance is a complicated system of engagement between the firm’s management team, board of directors, owners and other stakeholders. Development of the corporate governance is spurred by commitment of the business to succeed in competition. On the other hand, it is impacted by regulatory framework So far Ukraine’s business sophistication in general and corporate governance development in particular have not facilitated companies’ successful adaptation to global and domestic economic processes. The Change Readiness Index, compiled by KPMG in cooperation with ODI and EIU, ranks Ukraine 37th amongst 60 emerging markets. Such a relatively low position comes from the country’s poor performance in the Economic sub-index, which determines change readiness in the business environment (51st place). This situation is not only peculiar to Ukraine as all post-Soviet nations score poorly for corporate governance, according to Global Competitiveness Report 2013. Ukraine shows evidence of a downward trend in a number of dimensions, with its regions delivering even worse performance (Figure 3.3). If compared with its peers, the country scores for corporate governance indicators are considerably lower in most cases (Figure 3.4). Ukraine earns the lowest scores for protection of minority shareholders’ interests (146th place out of 148 nations). In addition, business executives assess very low the extent of market dominance (132nd place globally). External investor relations are underdeveloped; the fact substantiated with poor scores for the strength of auditing and reporting standards (130th place) and regulation of securities exchanges (129th place in GCI 2013). Furthermore, Ukraine performs even worse over time, losing seven places in the extent of market dominance and four places in the willingness to delegate authority between 2011 and 2013 (see Figure 3.5 for details).

ASSESSMENT OF CORPORATE GOVERNANCE IN REGIONS For the purpose of the Report, we can divide indicators measuring the corporate governance effectiveness into two groups: indicators, which depend on commitment of businesses to boost management effectiveness, and indicators, which mainly depend on the government regulation of business environment and establish rules guiding relations of market players. The first group includes metrics that assess the management teams’ effectiveness, commitment to delegate authority to other managers and report to stakeholders. The second group evaluates business development in the context of existing regulation of relations with shareholders, investors and competitors.

Efficacy of corporate boards The Survey’s respondents assessed the efficacy of corporate boards through the prism of relations between business owners (investors) and senior managers, namely managers’ accountability to the owners (investors). Executive Opinion Survey 2013 shows that Ukraine’s average score of 5.11 is above the global average of 4.51 scores, at the same level as the UAE (24th place globally). To a certain extent, such high results are down to a relatively small number of public joint-stock companies in Ukraine’s corporate sector: sole or few owners are very often directly involved in business administration, being in fact a part of the management teams. Donetsk (5.44 scores), Zaporizhzhya (5.40 scores) and Sumy (5.40 scores) are the top performers in the efficacy of corporate boards, at the level of Luxemburg (5.49 scores) or the Netherlands (5.47 scores). The lowest scores are in the Autonomous Republic of Crimea (4.77 scores), Chernivtsi (4.78) and Chernihiv (8.89 scores), which is comparable to Latvia or Kazakhstan (4.8 scores each). The economy of scale is quite evident: large companies enjoy higher efficacy of corporate boards (5.34 scores) than small ones (5.14 scores). Cross-industrial comparison suggests that banks, insurance (5.35 scores) and investment (5.33 scores) companies are leaders, while hotels and restaurants (4.95 scores) are underachievers. Reliance on professional management To ensure business efficiency, companies should engage top professionals selected in competition and capable of making very competitive decisions to take key management positions. The assessment of reliance on professional management demonstrates who takes key management posts – either relatives and/or friends irrespective of their skills and qualifications or professional managers selected for their high qualifications and hands-on experience. Ukraine performance scores 4.19 in this indicator on average, similar to the world’s average (4.3) but below Kazakhstan (4.26 scores), but above the Slovak Republic (4.16 scores). Khmelnytsky (4.48), Zhytomyr (4.42) and Rivne (4.50 scores) earn the highest assessment matching the result of Lithuania (4.57 scores). Chernivtsi (3.81), Lviv (4 scores) are most critical about the reliance on professional management, with the performance quite comparable to Azerbaijan or Armenia (3.9 scores each). The gap in scores is observed in companies of different size: from 4.18 scores in small businesses to 4.52 in large firms. Unlike the efficacy of corporate boards, hotels and restaurants (4.60 scores) and mining industry (4.51 scores) give the highest assessment of the reliance on professional management, while production and distribution of electricity, gas and water assign the lowest score (4.04 scores). Willingness to delegate authority The management’s willingness to delegate authority is an essential element of the management function in a company. Delegation of authority helps to build an effective management hierarchy and ensure the best distribution of workload to meet strategic and operational objectives. If a senior manager consolidates all his powers to hand, he will appear to be over loaded with work and gets distracted from

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.3

Corporate governance scores of Ukrainian regions and global economies Regions’ average Worst region

Best region

Worst country Strength of auditing and reporting standards

Best country

2.30

Efficacy of corporate boards

3.72 Same for 27 regions 2.64

Protection of minority shareholders’ interests

2.55

Extent of market dominance

2.03

Reliance on professional management

4.77 2.94 3.21

Ivano-Frankivsk

5.90

4.50 Rivne

3.81

6.30

3.82 Sumy

6.60

3.98 Sumy

3.31

2.03

6.00 6.20

4.69

2.73

Willingness to delegate authority

5.44 Donetsk

3.78 Khmelnytsky

2.12

Regulation of securities exchanges 1.25

6.7

6.00

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

Figure 3.4

Performance of Ukraine and peer countries in corporate governance indicators Strength of auditing and reporting standards

Efficacy of corporate boards

Protection of minority shareholders’ interests

Extent of market dominance

Reliance on professional management

Regulation of securities exchanges

Willingness to delegate authority

25 Ukraine Russia

50 Poland Turkey

75 Slovak Rep. Azerbaijan

100

125

150 Rank

Source: World Economic Forum, The Global Competitiveness Report, 2013.

business objectives intrinsic to his hierarchy level. Thus, his effectiveness and efficiency get worse. On the other hand, his subordinates (lower-level managers) cannot fully utilize their potentials, losing motivation to achieve competitive results.

According to Executive Opinion Survey 2013, the country’s average in the willingness to delegate authority scores 3.61, which is below the global average (3.79) and corresponds to the same level as Turkey or Bosnia and

CHAPTER 3. Level of business development is not sufficient for successful competition 40

Figure 3.5

Changes in Ukraine’s corporate governance indicators in the GCI Protection of minority shareholders’ interests Strength of auditing and reporting standards

Reliance on professional management Extent of market dominance Regulation of securities exchanges Willingness to delegate authority Efficacy of corporate boards 2013 2012 2011

Strenght of investor protection 0

100

125

150 Rank

Source: World Economic Forum, The Global Competitiveness Report, 2011-2013

Herzegovina (3.62 scores and 3.58 scores each). From a regional perspective, Sumy (3.98 scores), Khmelnytsky (3.87 scores) and Ivano-Frankivsk (3.85 scores) give the highest assessment of the willingness to delegate authority, while Kirovohrad (3.31 scores), Ternopil (3.32 scores) and Sevastopol (3.36 scores) give the lowest scores. Delegation of authority in Ukraine’s large businesses (3.79 scores) merely matches the average value of the GCI nations (approximately at the same level as Poland), however it is lower in domestic medium-sized enterprises (3.58 scores). The sectoral gap is quite significant – from 2.66 scores (investment firms) to 4.57 scores (hotels and restaurants). Strength of auditing and reporting standards Business transparency and reporting standards are an essential element of effective management as they help to build trust within business partners and public reputation, determine credit risks and thus the cost of debt raised for business development needs. Although the requirements for auditing and reporting standards are established by law, compliance depends on the business itself. Ukraine’s score for the strength of auditing and reporting standards is 3.72 scores (130th place globally), being below the GCI’s average for 148 countries (4.55) and the worst result for the CIS countries. Protection of minority shareholders’ interests Protection of minority shareholders’ interests against abuse by majority shareholders or senior managers is a pressing issue in regulation of corporate relations in Ukraine. Players operating in markets with numerous public joint-stock companies need to be confident that interests of an owner who holds even one share would be considered and that the companies’ management or majority shareholders would not exercise their influence entirely to their own benefit. If there is no confidence, businesses suffer from fewer opportunities to attract investment through equity market. Survey 2013 suggests that Ukraine’s average score for protection of minority shareholders’ interests is only

3.36. This is at the same level as Romania at 128th place (3.34 scores), considerably below the global average of 4.14 scores. A regional breakdown shows that minority shareholders’ interests are most protected in Khmelnytsky (3.78), Sumy (3.77) and Chernihiv (3.75 scores), which perform approximately at the same level a Armenia (3.77) or the Czech Republic (3.95scores). Exceptionally low scores are in Cherkasy (2.94) and Odesa (3.05 scores) Oblasts and city of Kyiv (3.07 scores) close to Serbia’s (with score of 2.7 and 144th place amidst 148 countries). In terms of economy branches, banking (3.82) and hotels and restaurants (3.75) sectors give relatively high assessment for this indicator, while trade (3.10) and construction (3.13 scores) deliver the worst results. Business size does not entail any significant gap in scores although large companies take the lead (3.47, like Moldova or the Kyrgyz Republic with 3.5 scores). Extent of market dominance Free and fair competition encourages higher quality of corporate governance yet environment supporting the competition should be developed both at the macro- and micro-levels (largely though antimonopoly regulation). In Ukraine, the extent of market dominance gains the average score of 3.99, which is a little (by 0.19 points) above the average value globally and matches 53rd position (above Estonia at 57th place). In a regional breakdown, Ivano-Frankivsk enjoys the lowest extent of market dominance (4.69), performing nearly at the same level as Poland at 17th place (4.8 scores). Donetsk Oblast with 3.21 scores has the highest market dominance, comparable with South Korea (3.25 scores, 118th place), where chaebols (large business groups) dominate. According to the Survey, Ukraine cannot boast of effective corporate governance. In general, assessment of corporate governance dimensions signals uncompetitive Ukrainian business although large companies seeking to develop corporate governance principles have higher scores for some abovementioned indicators than the national average.

The increasing global attention to the soft factors of business sophistication has become an important trend of recent years. Such factors include (but not limited to) ethical behaviour of firms, corporate social responsibility and staff policy. They help to improve relations between different groups of stakeholders, both internal and external, and increase the companies’ value by using such intangible assets as reputation and ethics. Indeed, corporate ethics plays an important role because of the risk of losing reputation with internal and external stakeholders.

Business ethics are about certain culture of interaction between management and staff, on the one hand and external stakeholders on the other hand, quite often on the basis of code of ethics of the company, starting from informal rules and ethical guidelines and to official mission of the company as behaving ethically helps business to enhance its competitive positions in the long term

The Executive Opinion Survey demonstrates that despite the high interest of Ukrainian companies to the issue of corporate ethics there are very few companies in the country taking real actions in this regard. Thus, only 28% of large Ukrainian companies have approved values and codes of business conduct (according to the report “CSR 2005-2010: Current state and development perspectives”, UNITER, 2011). According to WEF’s Global Competitiveness Report 2013, Ukrainian companies fall behind most peer countries in ethical behaviour of firms (130th out of 148 nations). The low performance of the country in the indicator is also confirmed by the fact that not a single Ukrainian company has ever entered the World Most Ethical Companies (annual list of the world’s most ethical companies compiled by the Ethisphere Institute). The reasons for such poor performance of the Ukraine in corporate ethics include the high level of corruption, low level of local competition, and poor relations with consumers (Figure 3.6). The following factors affect the ethical relations between business and government (B2G), business and other businesses (B2B) and business and consumers (B2C): B2G: Widespread corruption practices (130th) and very low level of judicial independence (139th). B2B: Low level of competition in the internal market (106th globally), taking into account that corporate ethical behaviour is not regarded as a tool of competitiveness. B2С: Very small share of companies building trustworthy and long-term relations with consumers (both, with the use of hard approaches (like IT solutions, e.g. CRM) as well as soft informal approaches). The Executive Opinion Survey carried out by the Foundation for Effective Governance in 2013 reveals regional features of ethical behaviour of firms. Thus, the average assessment of ethical behaviour of firms in all the Ukrainian regions, with a score of 3.58. This score is relatively low in global scale, approximately at the level of Russia (101st, in 2013). The regional disparity is not that large as all the Ukrainian regions receive poor assessment in this indicator. The

regions demonstrating the highest level of ethical behaviour include Poltava (3.76), Donetsk (3.84) and Dnipropetrovsk (3.84) Oblasts. Volyn (3.35), Kherson (3.35) and Ivano-Frankivsk (3.36) are the Oblasts with the lowest level of ethical behaviour. If reviewed by sector, banks (4.07), transportation and communication companies (3.88), and hotels and restaurants business (3.28) demonstrate strong ethical practices. It is worth noting that the first two sectors are subject to stringent industry regulation. Mining companies (3.3), trading area (3.41) and construction firms (3.58) are the least ethical sectors. Perhaps, the highest level of corporate ethics is found in B2B relations, in the context of two dimensions: high importance of business reputation and ethical behaviour in fulfilment of obligations. Business reputation is very important for business: on average, business executives of Ukrainian Oblasts regard it as the main asset (scoring 6 out of 7). Companies in Kirovohrad and Odesa Oblasts and Sevastopol City value reputation more than other Oblasts (6.28, 6.18 and 6.19 respectively). Rivne, Kherson and Cherkasy believe that reputation is of high importance less than other regions (5.59, 5.75 and 5.77). The breakdown by sector shows that financial sector is more worried about their reputation (banks with score of 6.39; insurance companies with 6.25) compared with resource-based sectors (mining industry with 5.47; electricity, generation companies and gas and water production and supply companies with 5.61). The disparity in regards to the size of the business is insignificant. In general, Ukrainian businesses are satisfied with partners’ ability to meet business obligations, with the regional average of 4.44. Business executives of Sevastopol (4.77), Cherkasy (4.76) and Kirovohrad (4.73) Oblasts are mostly satisfied with the ability of their partners to meet their obligations, while Kyiv City, Chernihiv and Kherson Oblasts (4.02, 4.02 and 4.18 respectively) are rather not so happy with this indicator. Sectoral analysis shows that business executives of investment companies give a high assessment score for the ability of their partners to meet obligations (4.92), while executives of construction companies poorly assess performance of their partners in this area (3.86). Executives of large companies usually value trust relations with their partners more than others.

Ukrainian regions suffer from tense B2G relations as a result of high judicial dependence, corruption / bribery practices and use of corruption schemes for getting the state budget money

Businesses identify the low level of judicial independence, as courts depend on power authorities, business and individuals to a great extent (the regional average of 3.05, at the level of 109-110th places, obtained by Croatia and Armenia). Large regions, most of all, Kyiv City (2.41), Odesa (2.50) and Crimea (2.72) show the worst performance in this indicator. The best performing Oblasts include Volyn (3.59), Chernihiv (3.43) and Zhytomyr (3.36). However, their scores correspond to approximately 90th place, at the same level as Kazakhstan, Georgia, or

CHAPTER 3. Level of business development is not sufficient for successful competition

3.3 Corporate ethics

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.6

Indicators affecting corporate ethics in Ukraine and peer countries

Corporate ethics

Irregular payments and bribes

Intensity of local competition

Degree of customer orientation

Ukraine Russia

Poland Hungary

100

125

150 Rank

Moldova

Source: World Economic Forum, Global Competitiveness Report, 2013

Figure 3.7А

Comparison of corporate ethics in Ukrainian regions and global economies. Regions’ average Worst region

Best region

Worst country

42 Corporate ethics

2.76

Best country 3.35

3.84 Donetsk

6.57

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

Figure 3.7B

Corporate ethics indicators in Ukrainian regions. Regions’ average Worst region

Best region

Ability to meet business obligations

4.02

4.44

4.77 Sevastopol

Importance of business reputation

5.59

Diversion of public funds

2.59

3.65

Bribes for export and import operations

3.28

4.59 Khmelnitsky

Bribes when interaction with utility services

4.64 3.84

Bribes for government procurement, licenses

2.97

Bribes in connection with obtaining court rulings

2.50

Judicial independence

2.41

3.05

4.43

3.66 3.38

6.28 Kirovohrad

4.20 Poltava 3.94

Bribes when making tax payments

6.00

5.09 4.85

5.54 Khmelnitsky Mykolayiv

4.21 Kirovohrad 3.96 Poltava 3.59 Volyn

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

(3.61), export and import operations (3.90). Corruption is less likely to occur in such areas as tax payments (4.39) and interaction with utility services (5.07). Assessment of ethical behaviour of firms shows that on the one hand business executives understand and advocate the importance of corporate ethics and some of them even seek to do business on the basis of ethical standards. On the other hand, in reality ethical behaviour in every aspects of their activity is rather an exception than a rule. The probable reason for such behaviour can be the possibility to bypass the rules and stay unpunished (for example, by using corrupt practices in B2G relations) as well as failure to solve the problems without irregular payments (bribery). It is for this reason that ethical behaviour of firms is assessed high in B2B relations where there are market mechanisms in place.

3.4 Corporate social responsibility Corporate social responsibility (CSR) contributes to sustainable business development as it takes into account the interests of different groups of stakeholders and, in particular, the community of the Oblasts where the company operates. At present CSR is regarded as an investment in sustainable development of business in the long term. The world practice shows that in most cases CSR is regarded as an integral part of the key business activity.

Corporate social responsibility of business refers to voluntary actions undertaken by business to take into account the interests of the public, employees, partners and other stakeholders

The importance of CSR for business in the Ukraine is confirmed by some research: 38% of companies note that CSR can boost sales and 19% state that they implement CSR policies to emulate the actions of competitors (according to the report CSR 2005-2010, UNITER, 2011). The major constraint facing business in implementing CSR policies is the shortage of available funds, in particular after the financial recession of 2008-2009. Thus, 61% of the national companies (especially small business) do not regard CSR as their priority objective because of lack of funds, while just 17% of companies (large business mainly) allocate special budget for such purposes (according to CSR 2005-2010, UNITER, 2011). At the same time, over a half of Ukrainian companies (57%) believe that CSR refers to charity actions, despite the fact charity is not considered as a kind of CSR activity in the world. It is quite possible that reluctance of business to spend for CSR in general also results from lack of habit to support people in need. Thus, the Ukrainian society ranks 111th (out of 153) in generosity in giving money with only 7% of people ready to make cash charitable contributions according to World Giving Index 2012 (according to the poll of over 150,000 respondents in 153 nations of the Gallup World View 2011, see Table 3.2): According to the Executive Opinion Survey, in most cases CSR policies in the Ukraine refer to internal staff policy, first of all, HR development projects (4.16

out of 7, Ukraineâ&#x20AC;&#x2122;s regional average). Lower attention is given to participation of business in environmental and infrastructure projects in the Oblasts of their operation (3.85) and projects with public engagement (3.68) in such areas as healthcare and sports, education and culture and social security. Internal projects including social programmes for employees enjoy the biggest popularity, according to the survey carried out by the Foundation for Effective Governance. In Sevastopol City, Mykolayiv and Chernivtsi Oblasts the companies are more likely to finance staff development projects (4.67, 4.54 and 4.53 respectively). In Chernihiv, Kherson and Rivne Oblasts this area is not so popular (3.84, 3.88 and 3.95). It is worth noting a wide disparity in this indicator by sectors. Thus, agricultural companies (4.79) and banks (4.46) are more likely to invest in social projects, while investment companies are rather not interested in programmes for their staff (3.00). Mid-sized business gives the best scores (4.74) at the same time. Table 3.2

Ukraine and peer countries in World Giving Index

Country

Place (out of 153)

Cash donations (%)

Slovak Republic

Moldova

Belarus

Hungary

Poland

Czech Republic

Ukraine

111

Romania

119

Russia

127

Bulgaria

137

Average in CEE countries

104

Source: Charities Aid Foundation, Global World Giving Index, 2012.

The Oblasts engaged in infrastructure development and environment protection projects include Poltava (4.32), Vinnytsya (4.26) and Kherson (4.37). Amongst the outsiders are Kyiv City (3.16), Rivne (3.40) and Chernihiv (3.42) Oblasts. Often agricultural companies are engaged in this type of activity more than other businesses.

CHAPTER 3. Level of business development is not sufficient for successful competition

Azerbaijan. Business executives of large companies note that judicial system is highly affected by third persons (2.90). Their opinion is shared by executives of investment companies (2.55), banks (2.8) and mining industry (2.74). As usual, businesses identify that obtaining money by corruption from the state funds has become common practice: the regionsâ&#x20AC;&#x2122; average makes 3.65 scores. Large regions suffer more from corrupt practices: Kyiv City (2.59 scores), Dnipropetrovsk (3.09) and Donetsk (3.17) Oblasts. The best situation is in Poltava (4.20 scores), Chernihiv (4.10), and Vinnytsya (3.91) Oblasts. Interestingly enough, according to business executives, the widespread corrupt practices in companies mostly refer to additional irregular payments and briberies in connection with obtaining court rulings (3.32), state orders and licenses

CHAPTER 3. Level of business development is not sufficient for successful competition 44

Figure 3.8

CSR related indicators in Ukrainian regions. Regions’ average Worst region

Best region

Internal projects including social programmes for employees

3.84 4.16

Infrastructure development and environment protection projects Projects supporting local communities:

3.16

healthcare and sports, education and culture and social protection

2.96

Long-term initiatives to support local communities

2.58

3.07

3.85

3.65

4.67 Donetsk

4.37 Sevastopol

4.05 Luhansk

3.55 Vinnytsya 7

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013.

The CSR policy of Ukrainian companies also focuses on the projects supporting local communities in such areas as healthcare and sports, education and culture, social security: the average regional score is 3.65. The Oblasts with high level of participation in such projects include Kirovohrad (4.05), Chernivtsi (4.04), Kherson (4.03) and Khmelnytsky (4.00). The assessment of business participation in local community development in Donetsk and Lviv Oblasts as well as in Kyiv City is low (3.41, 3.46 and 2.96 respectively). Agricultural companies have got the highest scores in this dimension (4.62) which could be explained by their direct engagement into the communities’ everyday life. Business long-term initiatives to support local communities are assessed poorly, with the Oblasts’ average scores of 3.07. Only 42% of respondents note that their companies provide some help to their Oblasts. Mostly they help to improve the areas (31%) and create jobs (19%, which again refers to internal staff policy). Companies in Kirovohrad (3.55), Zakarpattya (3.53) and Ivano-Frankivsk

(3.44) Oblasts are the major contributors in creation of long-term programmes in their Oblasts. Companies in Kyiv City and Odesa Oblast are less active, with scores of 2.58 and 2.84 respectively. The industries which cannot pursue short-term profits due to their production cycles show the highest level of participation in long-term programmes in their Oblasts: electricity, gas and water production and distribution companies (3.95), agricultural firms (3.74) and mining enterprises (3.42). The sectors requiring small capital investment are less interested in long-term programmes: financial services (investment (2.33) and insurance (2.61) companies) and trade (2.65). Thus, to conclude, although Ukrainian business realizes the role of CSR as a tool to improve its reputation and overall competitiveness as a result quite often it is slow in implementing CSR policies due to lack of funds. In most cases CSR is not the area which is pursued regularly or regarded as a priority. CSR policy of Ukrainian companies focuses mostly on internal projects connected with own staff.

3.5 Human resources Inefficient labour market reduces Ukraine’s competitiveness both in economic and social dimensions. According to GCI compiled by WEF, the factors contributing to higher labour market efficiency and flexibility include high quality of management, availability of scientists and engineers, extent of staff training, direct dependence between pay and productivity, gender equality in labour force, and compliance with hiring and firing standards.

Labour market flexibility means that employer/employee relations are based on trust. Labour market efficiency and flexibility give a chance to improve employees’ performance results and retain and attract talents to the country

This can be seen, for example within Ukraine, where there is a wide gap between supply and demand. In 2012,

the demand to supply ratio in the official labour market was 1 to 11 (can be compared with 1 to 8 in 2011), according to the State Statistics Service. In addition, the regional disparity in official salary is 1 to 2 (Ternopil Oblast and Kyiv City in 2013). In fact, nowadays Ukraine faces a deadlock, as on the one hand the employers want to have highly-skilled labour force on board, but they are not ready to pay good salaries, improve skills or provide career opportunities, and on the other hand, skilled employees are not satisfied with the working conditions and do not have any incentives to improve their performance. The results of WEF’s Global Competitiveness Index confirm the fact: cooperation in labour-employer relations is very low and the relations are very tense (125th position out of 148 countries in 2013). As a result, according to GCI 2013 (WEF) the labour market efficiency is not a competitive advantage of Ukraine anymore as Ukraine ranks 84th out of 148 countries globally (62nd place in 2012). Ukraine falls behind Azerbaijan (30th

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.9

Human resources indicators in Ukraine and peer countries

Labor market efficiency

Local availability of research and training services

Extent of staff training

Cooperation in labor-employer relations

Flexibility of wage determination

Hiring and firing practices

Pay and productivity

Reliance on professional management

Female participation in labor force

Willingness to delegate authority

Availability of scientists and engineers

25 Ukraine Russia

50 Poland Romania

75 Azerbaijan

100

125

150 Rank

Source: World Economic Forum, The Global Competitiveness Report, 2013.

place), Russia (72nd place), Slovak Republic (76th place) and Poland (80th place) but outperforms Turkey (130th place) and Romania (110th place). It is still worth noting that over the last year the performance of peer countries in labour market efficiency has also deteriorated: Romania is down 6 positions and Azerbaijan loses 4 positions in the ranking. The situation in Ukraine is getting worse as experience and qualifications are not seen as the main criteria to be elected to high positions in the company (128th place); talents migrate to other countries (140th place in capacity to retain talents and 136th place in capacity to attract talents); willingness to delegate authority is low (124th place); cooperation in labour-employer relations is low (125th place); and management is not interested in staff training and development (103rd place). At the same time competitive advantages of Ukraineâ&#x20AC;&#x2122;s labour market are good in respect to hiring and firing practices (32nd place), good pay and productivity ratio (26th), and high level of availability of scientists and engineers (46th place).

From 2011 to 2013 the most negative trends has been observed in flexibility of wage determination (a loss of 20 positions, 79th place in 2013). There is a sharp drop in cooperation in labour-employer relations (down 16 positions, 125th place in 2013). At the same time, the pay and productivity indicator has improved: up 16 positions (26th place in 2013) and business executives pay more attention to staff training and development (up 14 positions, 103rd place in 2013).

ASSESSMENT OF HR POLICIES IN REGIONS Motivation, pay and productivity The GCI methodology suggests that business which uses equally all leverages to motivate staff, both material and non-material incentives, is more competitive. Certainly, motivation systems are different in each company and they also differ by regions. Despite of similar and low average estimates of non-material incentives used by businesses in all Ukrainian regions, Khmelnytsky and Odesa Oblasts

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.10

Human resources indicators for Ukrainian regions and global economies. Regions’ average Worst region

Best region

Worst country Labor market efficiency

Best country 4.42

2.80

Local availability of research and training services

2.51 2.78

Cooperation in labor-employer relations

3.44 Donetsk

2.60

Flexibility of wage determination

4.63

4.77

2.37

Reliance on professional management

3.81

2.12

5.54 Khmelnytsky 6.33

5.14 3.31

2.03

Availability of scientists and engineers

5.41

2.48

6.62

3.98 Sumy

2.83

7.00 Rivne

6.01 4.62 Kharkiv

6.30

Kyiv

5.83

4.50 Rivne

Female participation in labor force 1.00 Willingness to delegate authority

5.52 6.24

4.68 Ivano-Frankivsk

4.15

Pay and productivity

6.05 Kharkiv

5.08 4.84

1.68

6.47

5.57

2.28

Hiring and firing practices

5.77

5.51 Kharkiv

4.00

2.47

Extent of staff training

4.80 Khmelnytsky

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

Figure 3.11

Assessment of the motivation problems and talent management in Ukrainian regions. Regions’ average Worst region

Best region

How similar are women’s and men’s salaries

4.66

Provision of equal opportunities for women

5.13 5.07 5.39

Motivation system (remuneration only / non-financial incentives)

3.00

Attraction of external consultants

3.00 3.38

Easy to find the necessary specialists to business

2.92 1

3.55

5.46 Ivano-Frankivsk 5.76 Odesa

3.98 Khmelnytsky 3.91 Luhansk

3.58

4.26 Kharkiv 7

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013.

motivate their employees with the help of different nonmaterial incentives (3.98 and 3.91 scores respectively) rather than only with material incentives. At the same time Poltava and Ternopil Oblasts are more focused on material incentives (3 and 3.18 scores) Construction companies and banks use non-material incentives more often compared with other sectors (4.02 and 3.86 scores), while companies in resourced-based industries like mining (3.24 scores) and electricity, gas and water production and distribution (3.33 scores) as well as construction (3.33 scores) are less likely to use non-material incentives. In general, non-material incentives are not widespread in businesses of any size.

In the context of free and efficient labour market the workers’ pay should directly depend on their productivity: the higher employees’ productivity, the bigger their remuneration. According to GCI 2013, the pay and productivity indicator in Ukraine scores 4.50, at the same level as Saudi Arabia with 4.52. Meantime, the average salary in Saudi Arabia is 4-5 times higher than that in Ukraine. These disparities confirm that good pay and productivity is ensured through low level of salaries and hence low level of productivity. The regional average of pay and productivity in the Ukraine scores of 5.07. This is much higher than the global

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.12

Dynamics of human resources indicators. Labor market efficiency Pay and productivity

2013 2012 2011

Hiring and firing practices Availability of scientists and engineers Women in labor force, ratio to men* Flexibility of wage determination Availability of research and training services Extent of staff training Willingness to delegate authority Cooperation in labor-employer relations Reliance on professional management 0

100

125

150 Rank

47 Source: World Economic Forum, The Global Competitiveness Report, 2011-2013.

average among 148 nations (3.87 scores). The workers’ pay depends on their productivity to a large extent in Khmelnytsky (5.41) and Lviv (5.29 scores) Oblasts. In Poltava Oblast and Kyiv City the pay and productivity ratio is lowest (4.77 and 4.81 scores respectively) albeit they have a twofold difference in the average salary level. Business executives believe that the sectors with higher pay and productivity ratio include the construction branch (5.51), agriculture (5.33) and the hotel and restaurant businesses (5.18 scores), while the financial sector has less dependence between pay and productivity (4.33 scores for investments companies and 4.6 for banks). The company size does not affect the indicator. Talent management Talents (highly skilled and efficient staff) are an important element of competitiveness both for business and for the country as a whole as they hold the key management positions in all areas of the companies’ activity, make the most successful strategic decisions and scientific discoveries, ensure development and implementation of new technologies in management and production. According to Global Talent Index 2011 (the project of The Economist Intelligence Unit assessing the countries’ capacity to develop, attract and retain talents), Ukraine ranks 43rd (38 scores) among 60 countries. A number of peer countries significantly outperform Ukraine, including Poland (29th), Slovak Republic (32nd), Russia (34th) and Romania (36th). At the same time Ukraine is ahead of Bulgaria (49th) and Azerbaijan (54th). According to this Index forecast, the situation in Ukraine is expected to slightly improve before 2015 (40.3 scores, up to 42nd place).

One of the conditions for development of talent inside the company is availability of training services at the local market. According to the Survey, Ukraine’s average score is 4.62. This is better than the global average of 4.17. Availability of high quality specialized training services is higher in Kharkiv Oblast (5.51) and Kyiv City (5.22 scores). Chernihiv and Poltava Oblasts do not provide good opportunities for training (4 and 4.28 scores respectively). Large companies invest more in training of their staff (4.9 scores) though small companies have also a relatively high score (4.68 scores). That is hugely important, however, how the business want to spend for their employees’ improvement. In fact, this indictor is critical for all Ukrainian regions since companies are not willing to invest in their staff. In large industrial regions like Donetsk and Kharkiv business executives are more likely to improve the skills of their staff and allocate slightly higher budgets for such purposes (3.44 scores and 3.31 scores respectively). On the contrary, executives are less likely to improve staff skills in Luhansk (2.78), Lviv (2.87 scores), Ternopil (2.89 scores) Oblasts. If taken by sectors, the ranking leaders are the financial sector (insurance companies with 3.88; investment companies with 3.75 scores) and hotels and restaurants business (3.48 scores). Amongst the outsiders there are the companies working in electricity, gas and water production and distribution (2.98 scores). The business size does not influence results as a rule. Gender equality According to Women’s Economic Opportunity Index 2012 (compiled by The Economist Intelligence Unit

CHAPTER 3. Level of business development is not sufficient for successful competition 48

in partnership with с Vital Voices Global Partnership, LaPietra Coalition) which measures specific attributes of the environment for women employees and entrepreneurs in 128 economies, Ukraine ranks 57th in gender equability (55.4 scores). Compared with last year the situation in Ukraine has improved (by 2.1 points), although Ukraine falls behind such peers as the Slovak Republic (26th place), Poland (34th place) and Romania (43rd place), but being still ahead of Russia (66th place) and Turkey (65th place). The Executive Opinion Survey shows that business executives believe that in general Ukrainian women get the same level of salary as men (5.13 scores). Chernihiv, Chernivtsi and Khmelnytsky Oblasts are more inclined to give equal pay for equal work to men and women (5.45, 5.45 and 5.44 scores accordingly), whilst there is a wide gap between male and female salaries in Zaporizhzhya and Kharkiv Oblasts and in Kyiv City (4.66, 4.85 and 4.81 scores respectively). The sectors with the highest level of female employment have the narrowest gap: agriculture (5.68 scores) and hotels and restaurants business (5.41 scores). Meanwhile the gap gets wider in the heavy branches like construction (4.96 scores) and manufacturing industry (4.97 scores). Business executives also often believe that they provide women and men with the same career opportunities. Odesa and Chernihiv Oblasts and well as the Autonomous Republic of Crimea create more equal opportunities for men and women (5.76 scores, 5.69 scores and 5.6 scores respectively), while Zaporizhzhya, Ternopil and Kyiv City provide less equal career opportunities (5.07, 5.12 and 5.22 scores). Financial sector ensures more equal gender conditions in banks (5.62), insurance companies (5.62) and investment companies (5.75 scores). Sectors which require physical work are characterized by wider gender disparities: manufacturing industry (4.94), electricity, gas and water production and distribution (5.29 scores). Midsized business incorporates gender equity in its work better (5.24 scores) compared with small business (4.99 scores). Hiring and firing practices According to Hays Global Skills Index 2012 (by Hays company, in partnership with The Oxford Economics think-tank), Europe has faced a number of problems: declining and ageing skilled workforce and lack of staff with international experience or skills. Ukraine is not an exception as according to “Creating Jobs in a Global Economy”, the report by Hays, Ukraine ranks 4th in the top 25 countries which will experience the sharpest fall in population of working age in the period between 2010 and 2030. Still, Ukraine is quite flexible in hiring and firing practices. Thus, the firing and hiring practices are very flexible in Ivano-Frankivsk (4.68) and Luhansk (4.64 scores) Oblasts. In Chernihiv Oblast and city of Sevastopol the hiring and firing practices are more regulated by the state than by the employers (4.22 and 4.15 scores). In the branch comparison, the similar situation is in mining industry. It is obvious that the hiring and firing practices are more controlled by employers of small companies (4.39 scores), while medium and large companies deal with the legislation requirements (4.05 scores).

Cooperation in labour-employer relations Absence of conflicts between employees and employers has a direct impact on the labour productivity in the company and its competitiveness as an outcome. According to the Executive Opinion Survey, Kharkiv Oblast can boast of partnership in employee/employer relations (5.08 scores), while city of Sevastopol has rather conflict-ridden labour-employer relations (4.63 scores). The hotels and restaurants sector demonstrates good level of cooperation between employees and employers (5.18 scores), while conflicts are more common in the mining industry (4.50 scores). Flexibility of wage determination Higher flexibility of wage determination makes companies more competitive in spite of the fact that it might infringe the interests of hired workers. In general, Ukrainian business is not restricted in this issue. In Kyiv City each company makes its own decision about the level of salary (5.52 scores), while in Luhansk Oblast wages and salaries depend on the industry payment scale (4.84 scores). In the trade firms (5.25 scores) and insurance companies (5.2 scores) wages and salaries are not regulated by legislation or trade unions and are rather defined for each individual case, in contrast to companies of electricity, gas and water production and distribution (3.21 scores). Skilled specialists search If business can easily find specialists with the required qualifications on the local market, it will spend less for searching and training staff; therefore business’ costs become lower thanks to inefficient work or incorrect decisions made by poorly-skilled staff. It is easy enough for business to find skilled specialists in Kyiv City (4.24 scores) and Kharkiv Oblast (4.26 scores); vice versa business executives have problems with finding staff in Kirovohrad (2.92) and Luhansk (3.11 scores) Oblasts. Due to oversupply of university graduates from various economic departments, insurance and investment companies as well as banks do not have problems with staff supply (4.12, 4.0, and 4.02 scores respectively). Companies in manufacturing (3.3 scores) and agriculture (3.45 scores) have much more problems when searching for proper professionals. Capacity to retain and attract talents Talented staff from large industrial and scientific centres like Donetsk (3.13 scores), Kharkiv (3.10), Dnipropetrovsk (3.11), Kyiv (3.14 scores) are likely to stay working in native regions, not trying to find jobs in other countries or Ukrainian regions. However, this is not the case for many residents of agricultural Oblasts like Ternopil (2.41) and Ivano-Frankivsk (2.36 scores) who are searching for jobs in other places. Interestingly enough, the results of the Executive Opinion Survey for this indicator by regions are in terms with the classification of Ukrainian contemporary labour migration developed by the Institute of Demography and Social Studies of the National Academy of Sciences of Ukraine. By industry, workers of companies in the electricity, gas and water production and distribution sector are more likely to migrate (2.56 scores). Obviously, employees of large companies are the least interested in changing their native region or country (2.89 scores).

Overall, the situation with searching, attracting and retaining skilled staff in Ukraine is aggravated by the fact that despite being interested in skilled staff businesses are not ready to pay competitive salaries and invest in staff improvements. It is no wonder, that valuable staff and talents might move to other companies, regions and even abroad.

3.6 Innovations The intensive competition in the global market and available opportunities for business activities require active application of innovations, technological solutions and financial instruments, which can be characterized as so-called the hard factors of business sophistication. The Global Competitiveness Index considers them mostly in two competitiveness sub-indices: efficiency enhancers (mainly for efficiency-driven economies, the level that Ukraine’s economy has recently achieved), and innovation and sophistication factors (for innovation-driven economies that should be the aim for any country including Ukraine).

The research shows that Ukraine performs worse than it could in hard factors. The fact is confirmed with its lag behind peers and even bigger gap from global leaders

Just five years ago, Ukraine’s performance in innovations in the Global Competitiveness Index could be seen almost as a competitive advantage (52nd in the GCI 2008). However, GCI 2013, has moved Ukraine to 93rd place for this pillar, down 22 places during a year. This downturn is not typical for Ukraine’s peers (post-Socialist and post-Soviet nations). As an example, Russia has risen by 7 positions over the last year, whilst Kazakhstan (having outperformed Ukraine) has risen by 19 places. As a result, the gap between Ukraine and its peers has widened significantly (15 places from Russia; 28 places from Poland and 56 places from the Czech Republic) and is likely to remain the same in the near future. However, many CIS and CEE countries have also only achieved smaller scores for innovation. Other evaluations, independent from that of the WEF, have also confirmed Ukraine’s low place in innovation factors. For example, Global Innovation Index 2013 (compiled by INSEAD business school, S. Johnson Graduate School of Management at Cornell University, and the World Intellectual Property Organization – WIPO) has placed Ukraine in 71st position out of 142, down 8 positions compared with 2012. Nevertheless, even with this score Ukraine is a leader amongst the medium-income nations. Yet another Global Innovation Index, compiled by Boston Consulting Group and the US National Association of Manufacturers, evaluates business capacity to encourage development of innovations. This organisation has placed Ukraine in 64th position out of 110 nations. The Global Innovation Quotient, published by Bloomberg and based on international data, ranks Ukraine 42nd out of 96 nations by innovations and only 69th by productivity. Various organisations’ rankings of Ukraine’s innovations in economy and business do not see the country as a leader. Moreover, the indices evaluating the innovations in business

(those by WEF and by BCG) have not placed Ukraine in the top 50, meaning that the country does not have a competitive advantage in the global perspective. An analysis of Ukraine’s innovation in the GCI (Figure 3.13) suggests that the downward trend is largely caused by a drop in scores for qualitative indicators: capacity for innovation (100th out of 142, down 42 places), company spending on R&D (112th, down 8 places), universityindustry collaboration (77th, down 8 places) and the quality of scientific research institutions (69th, down 5 places). Losing 21 positions, the indicator of availability of scientists and engineers has also dropped noticeably now to 46th place, yet it still can be seen as a competitive advantage. Ukraine performs relatively well in PCT patent applications (per capita) and takes 52nd place globally. Nonetheless, Ukraine continues to lose all of its competitive advantages in the innovation pillar of the Global Competitiveness Index.

ASSESSMENT OF INNOVATION ACTIVITY INDICATORS IN REGIONS Executive Opinion Survey 2013 conducted by the Foundation for Effective Governance shows that businesses are still not ready to invest widely in the development of innovations in Ukraine, and lack advanced technology. The top managers’ assessment of company spending on R&D and university-industry collaboration is low. Innovation potential of business The Survey conducted by the Foundation for Effective Governance in 2013 shows that the regional businesses look rather optimistically at the capacity for innovation. The average score across 27 regions is 4.03 scores, which is comparable with Azerbaijan (35th in the world). This relatively high result is partly due to the disposition of the regional business relying more on its own R&D then on adoption and purchasing such skills. The regional comparison gives the highest scores to Kyiv (4.24) and Volyn (4.25) Oblasts, while Zaporizhzhya (3.64) and Chernihiv (3.76) Oblasts’ rank at the bottom. In terms of industries, the highest scores come from business executives in the financial sector, in insurance (4.29) and investment (4.42) companies, whilst the lowest is from top managers in mining industry (3.76), transport and communications (3.83 scores). Large companies naturally have higher capacity for innovation (4.19 scores) than small enterprises (3.95) but the gap is not that significant. It is indicative that the executives assess business failures strongly and see them as valuable experience

CHAPTER 3. Level of business development is not sufficient for successful competition

Business executives of Kyiv City (4.21 scores) note that many talented people come to the capital from other Ukrainian regions. On the contrary, Zaporizhzhya and Ternopil Oblasts are the least attractive (2.03 and 2.05 scores respectively). Noteworthy, agricultural workers as well as workers of mining and manufacturing industries are less inclined to change their workplaces (with 2.48, 2.54, and 2.6 scores).

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.13А

Innovation scores of Ukrainian regions and global economies Regions’ average Worst region

Best region

Worst country Availability of latest technologies

2.52

Firm-level technology absorption

Best country 3.06

4.21 Donetsk

2.73

FDI and technology transfer

3.85

4.72 Donetsk

2.98 2.96

Quality of scientific research institutions

1.96

University-industry collaboration in R&D Gov’t procurement of advanced tech products

2.70 2.09 2.59

1.88

Capacity for innovation

6.35

2.45

2.28

5.84 5.57

3.99 Sumy

6.37

4.17 Kharkiv

2.97

6.05

3.33 Sumy

2.24

Production process sophistication

4.83 Kharkiv

3.53 Volyn 3.11

Value chain breadth Company spending on R&D

6.32

3.95 Kharkiv

1.87

Nature of competitive advantage

6.23

4.77 Zakarpattya

2.43

2.04 2.33

6.55

5.98

3.64 2.96

4.25 Volyn

5.84

3.80 Rivne

6.48

Sources: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

Figure 3.13B

Modernization scores of Ukrainian regions Regions’ average Worst region

Capital expenditures for modernization

3.86 4.25

Best region

4.73 Volyn

Sources: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

rather than something disgraceful (average score of 5.07 out of 7). The firm-level technology absorption is evaluated highly too (4.29). Considering this with the reasonably good assessment of the capacity for innovation, it signals that the Ukrainian businesses have kept their innovation potential and can revive it if there is sufficient funding and favourable market conditions. Availability of technologies and R&D spending If businesses are not developing the latest technologies by themselves, because of certain reasons, they can still adopt them from others. The faster and easier is can be achieved, the faster they can adapt to changes in the market. Therefore, the more access a business can have to the latest technologies, the more competitive it is believed to be. Unlike with the capacity for innovation, the regional business executives on average give low scores to availability of the latest technologies: 3.58 scores, which is slightly above the Kyrgyz Republic (3.57) ranking 138th. The regional comparison shows that the

latest technologies are mostly available in large industrial areas – Donetsk (4.21) and Kharkiv (4.20 scores) Oblasts as well as in Kyiv City (3.99 scores). However some other Oblasts like Chernihiv (with 3.06) and Luhansk (with 3.14) receive the lowest scores. The largest gap in these values is 1.15, which corresponds to about 50 positions in the global index. Top managers of large businesses give the highest scores for the availability of the latest technologies (3.91 scores). From an industrial perspective, the strongest evaluations come from insurance (4.02) and investment (4.60) companies as well as from hotels and restaurants (4.14 scores). The mining industry (3.45) and the sector of production and distribution of electricity, gas and water (3.42) are given the worst assessment. Businesses speak critically about company spending on R&D and give this indicator the lowest score compared with other dimensions of innovation – 2.85 on average across 27 regions. Only the leading ones can be compared with the global average value (3.3 scores), like Sumy (3.33)

University-industry collaboration Close cooperation of businesses with universities and R&D institutions make innovations very effective, from invention to final sales. The closer researchers and educators work with firms, the faster businesses get necessary technology, which eventually are relatively less expensive. University-industry collaboration in R&D for Ukraineâ&#x20AC;&#x2122;s Oblasts demonstrates very poor scores. The average value across all 27 regions in Ukraine is 3.01 (corresponds to the level of Bulgaria at 117th place). Kharkiv (3.95), Donetsk (3.61) and Dnipropetrovsk (3.64) Oblasts assess the indicator higher, while Poltava (2.68), Volyn (2.68) and Chernihiv (2.34) show the smallest results. It means that the largest regional gap is 1.62 scores or 90 positions in the global index, as between Turkey (52nd; 3.9 scores) and

the Kyrgyz Republic (142nd; 2.2 scores). From the sectoral perspective, the best scores come from banks (3.32) and investment companies (3.57), while the worst are seen in trade (2.74) and manufacturing industry (2.97 scores). Executive Opinion Survey 2013 shows that the quality of scientific research institutions on average in Ukraine receives 3.63 scores, with a large gap of 2.4 scores between the highest and lowest scores. The highest scores are registered in traditional R&D centres Kharkiv Oblast (4.83) and Kyiv City (4.44), which are comparable in the global ranking with Malaysia (4.88) or Spain (4.57), with 27th and 36th ranking respectively. Small agrarian Oblasts, such as Kirovohrad (2.84) and Zhytomyr (2.43) have given the poorest performance this year, approximately at the same level as Moldova (2.59, 13nd ranking). In sectoral benchmarking, the businessmen in agriculture are given the lowest scores (3.0), whilst executives in the construction indicate relatively good performance (4.21 scores). As global markets are getting more integrated and technologies are spreading quickly, innovations become a key driver of the economic growth and competitiveness of the national economies. To encourage effectively the development through innovations, countries need extensive cooperation of businesses, R&D institutions and universities as well as government in the context of preparation and adoption of innovations policies. The cooperation has developed slowly and inefficiently so far in Ukraine, this fact confirmed by the scores given in the GCI and the Executive Opinion Survey.

3.7 Internal business processes In todayâ&#x20AC;&#x2122;s competitive market companies use innovations to improve their production processes and better the quality of business administration. It is very important to be able to manage a variety of business processes: planning, modelling, marketing and customers relations as well as communication with external consultants. Implementation of management information systems is vital to make all business processes transparent for executives and owners.

The degree of business process automation indicates the business sophistication level in a country or region.

However, introduction of such management systems is complex and expensive with hard-to-measure results. For example, management information systems (MIS) are not widely used even in the European Union (Figure 3.14). Only half of all EU businesses use internal e-docflow (according to Eurostat data, 2012). The share of companies that apply more complex MIS is even smaller: only 22% use ERP (Enterprise Resource Planning); 23% use SCM (Supply Chain Management) and 26% use CRM (Customer Relationship Management) systems. It is hard to estimate correctly level of MIS implementation in Ukraine due to lack of necessary statistics, although it is possible to get rough estimations based on various sales data by MIS suppliers. General trend is that the market has gradually recovered after the crisis-caused drop in sales; it added 33% in 2012 (according to IDC consultancy). Large corporations install systems developed by large international

producers (over a half of the market by aggregate sales), whilst SMEs rather use locally developed software either from Ukraine or from Russia. From the sectoral perspective, manufacturing and retail businesses are the major consumers of such systems in Ukraine, which provide 64% of sales of MIS solutions. At the same time, very large companies (with more than 1,000 employees) provided up to 58% of ERP sales in 2012 (that is three times more than a year before). According to the IDC estimates, the key manufacturing branches industry (steel and chemical production), transport and communications (mostly pipeline transport and post communications) as well as energy sector are going to show the fastest growth in ERP. Along with automated systems, the compliance of corporate financial accounts with the international standards can influence the development of internal business processes as well. With 3.7 scores, Ukraine ranks 130th out of 148 nations by this indicator in Global Competitiveness Index 2013, which is the lowest score amidst all post-Soviet nations (e.g. Russia got 4.0 and 107th position, while Estonia got 5.5 scores and 26th position). In 2012, Ukraine went up from 133rd to 122nd place but failed to keep this position.

ASSESSMENT OF BUSINESS PROCESSES INÂ REGIONS Executive Opinion Survey 2013 conducted by the Foundation for Effective Governance shows how Ukrainian companies develop their internal business processes:

CHAPTER 3. Level of business development is not sufficient for successful competition

and Kharkiv (3.26), which perform at the same level as Slovenia and Lithuania (3.2 and 3.1 scores, or 62nd and 63rd places respectively). These results are similar to scores for the spending on R&D in large companies, while SMEs score is far less scores. Business managers in Kyiv (2.45) and Luhansk (2.85) Oblasts give the lowest scores to their regions that correspond to the 138th place out of 148 nations (only Moldova and the Kyrgyz Republic from the post-Soviet countries rank lower). The executives believe that agriculture and trade spend the least on R&D, while processing industry as well as transport and communications spend the most.

CHAPTER 3. Level of business development is not sufficient for successful competition 52

Figure 3.14 94

Use of electronic technologies in EU-27 (% of companies) 95

2010

71 50

Internet access

2012

Website

Sharing information electronically within the enterprise

Use of Enterprise Resourse Planning (ERP)

Business processes linked to those ofÂ suppliers (SCM)

Use of Customer Relationship Management (CRM)

Source: Eurostat, E-business integration, Statistics in focus, 6/2013.

introducing automated management solutions (including e-docflow, ERP, CRM, TQM etc.), marketing and sales management systems; applying new business models, business planning systems and engaging external consultants to address complex objectives. The Survey shows that the executives give the lowest scores for engagement of external consultants (with regional average of 3.38 scores), introduction of international standards (ISO 9000, etc.) of quality management systems (3.52) and application of automated management solutions (3.53). Business planning is assessed fairly low too with an average score of 3.87, which shows that planning is guided by intuition and experience rather than by a comprehensive analysis and modern technology. Business executives believe that Ukraine performs quite well in sharing information electronically (average score of 5.70) and care for customer needs (4.93). Large firms naturally assess business processes higher (4.54 on average) than medium-sized and small companies (almost equal scores of 4.18 and 4.17 respectively, see Figure 3.16). From the sectoral perspective, the highest scores for the business process development come from the financial sector (banks (4.79), insurance (4.61) and investment (4.49) companies). The electricity, gas and water companies receive the lowest scores (3.94). The difference between regional scores is small, with the best figures in large industrial Oblasts such as Kharkiv (4.38), Dnipropetrovsk (4.34) and Donetsk (4.34) as well as in the cities of Kyiv (4.29) and Sevastopol (4.22). Within the Oblasts of Ternopil (4.05), Kirovohrad (4.04) and Zaporizhzhya (4.08) business processes are assessed much lower than in other Oblasts. Management information systems Implementation of automated management solutions optimises and integrates all business processes in an organisation and establish an agile and efficient system for inter-departmental interaction and external partner engagement. The Executive Opinion Survey shows that on average the Ukrainians regions automate management processes rather reluctantly (3.53 scores). Merely 8% of companies have all of their operations fully automated (assessing maximum scores of 7). Other 13% have them almost fully automated (6 scores), that is comparable with average numbers across of the EU. As expected, large

companies give higher scores (4.22) than small (3.53) and medium-sized (3.37) enterprises. However, only 6% of large companies have fully automated operations, while only 5% for medium-sized businesses and 10% for small businesses did that. Financial sector (banks, insurance and investment companies) assign the highest scores for MIS. Producers and distributors of electricity, gas and water as well as construction firms give the lowest scores (2.96 and 3.04 respectively). The breakdown by region demonstrates that the large industrial Oblasts of Dnipropetrovsk (3.92) and Kharkiv (3.84) as well Sevastopol City (3.98) perform the best, while Chernivtsi (3.11) and Vinnytsya (2.99) Oblasts receive the lowest scores. Introduction of e-document flow management is an important indicator, which is fairly strong (5.7) across the Oblasts, unlike the automated management solutions. In fact, 28% of respondents apply e-docflow across the board, using specialised solutions (maximum score of 7). Other 35% of companies apply it widely (6 out of 7 scores). The specific indicator of application of e-docflow management in Ukrainian regions is thus higher on average than in EU27 and corresponds to the level of developed nations (e.g., Nordic countries like Denmark or Sweden). The breadth of its use does not depend much on the business size, however small companies have a slightly higher average score (5.75). The breakdown by industry is similar to that of MIS: the financial sector (6.25 scores for banks and 6.18 for insurance companies) has the best scores, while the worst are observed in agriculture (5.53) as well as hotels and restaurants sector (5.62 scores). Marketing and quality management Estimating marketing issues, Executive Opinion Survey 2013 considered both the effectiveness of marketing in general and customer relations in particular. The attitude of companies to total quality management was also part of a special focus. On average, the level of marketing in Ukraineâ&#x20AC;&#x2122;s regions is comparable with the average value of the GCI: 4.08 compared with 4.16 scores. This means that many Ukrainian companies apply marketing principles; although it does not necessary mean that they use the most advanced techniques. The extent of marketing does not necessarily depend on the size of the business, although the scores of large companies are in general better. At the same time,

Development of internal business processes in Ukrainian regions and global economies. Regions’ average Worst region

Best region

Worst country Extent of marketing

Best country

2.26

Degree of customer orientation

3.68

4.66 Donetsk

2.42

Control of international marketing and distribution

4.76 2.75

4.19

6.05 5.42 Chernivtsi

6.26

5.14 Sumy 5.64

Source: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

Figure 3.15B

Assessment of some internal business process in Ukrainian regions. Regions’ average Worst region

Best region

5.36 5.68

Sharing information electronically Introduction of new business models

3.65

Level of procurement system

4.11

4.63 Kyiv

3.98 4.33

Introduction of automatic management systems (ERP, CRM)

2.99

Use of external consultants

3.50

3.08

3.49

3.91 Luhansk 3.57 3.86

Introduction of international standards of quality control systems (ISO 9000)

4.71 Khmelnytsky

3.98 Sevastopol

3.00 3.36

Business planning

5.98 Donetsk

4.23 Vinnytsya 4.20 Sevastopol 7

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013.

within different branches, the difference is more evident: marketing is more developed in banks (4.60), hotels and restaurants (4.57 scores) and less in the resourcebased branches, like mining industry (3.94), production and distribution of electricity, gas and water (3.93), and agriculture (3.79). The regional gap is even wider, up to 1 score. Mykolayiv (3.68), Chernihiv (3.74), Zakarpattya (3.81) have the lowest scores, whilst the three largest industrial regions of Donetsk (4.66), Kyiv City (4.46) and Dnipropetrovsk (4.42) are top performers. Establishing customer relations is an important part of marketing management. Making such relations automated (via CRM systems) is one of key solutions in MIS. The Survey shows that business executives assess the engagement with customers as truly high, giving 4.93 scores on average across Ukraine’s regions. Small businesses give a higher score than medium or large companies. The manufacturing industry (5.15 scores) and hotels and restaurants (5.52) assign the highest scores for customer relations, whereas executives of banks and companies of the transport and communications sectors give the lowest assessment (by 4.94 both). Amid Oblasts, the worst scores for customer relations are seen in Volyn (4.76), Zaporizhzhya (4.77),

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.15А

Kirovohrad (4.81), whilst the best are in Chernivtsi (5.42), Zhytomyr (5.17) and Rivne (5.11). Business executives assess the level of introduction and application of international total quality management (TQM) standards (e.g. ISO 9000) quite moderately, with 3.52 scores on average. Only 13% of the respondents indicate that business processes in their companies are fully certified (7 scores); 12% of them, almost fully certified (6 scores). Large companies are well ahead (4.78) of small and medium-sized businesses (3.42 and 3.39 respectively). It is indicative that 30% of large companies have fully certified business processes, while the SME segment has only 12% share. The industrial breakdown is dominated by financial sector, where many processes must be certified (5.17 scores for banks and 4.23 for insurance companies). The resource-based industries give extremely low scores: agriculture (2.87) as well as production and distribution of electricity, gas and water (2.72). Mykolayiv (3.08 scores), Chernivtsi (3.16) and Volyn (3.17) Oblasts have the worse level of penetration of international quality management standards in regards to other regions. Sevastopol City (4.20), Dnipropetrovsk (3.92) and Luhansk (3.82) Oblasts receive the highest scores.

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.16

Assessment of business processes development by company size Use of external consultants

Introduction of international standards of quality control systems (ISO 9000) Introduction of automatic management systems (ERP, CRM) Business planning 251 and more employees 51-250 employees 20-50 employees

Introduction of new business models Extent of marketing Level of procurement system Control of international marketing and distribution Degree of customer orientation Sharing information electronically 1

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013.

Business planning and modelling Results of Executive Opinion Survey 2013 suggest that business planning in Ukrainian companies is based on intuition and experience of the chief executives rather than on a complex analysis involving the use of modern technologies. The average regional score of this indicator is 3.87 (out of 7). Merely 9% of respondents said that business planning in their companies is based on a complex analysis and contemporary techniques (maximum score of 7); yet a third of executives give 6 scores. Large businesses have better scores, with two fifths of them (41%) arguing they use contemporary techniques and systematic approaches for planning. The average score for the indicator in large companies is 4.61, much higher than the performance of medium-sized businesses (3.81; 30% give 6 or 7) and small businesses (3.80; 28% give 6 or 7 scores). The industrial gap is very large – up to three scores: financial sector attract the top scores (5.83 in banks and 4.90 in insurance companies), while construction demonstrates the lowest scores (2.98). Unlike the differences in scores by industries or size, the regional differences are not that large. Lviv (3.57) and Kherson (3.64) give the lowest scores, while Chernihiv (4.10) and Vinnytsya (4.23) perform slightly better. The Executive Opinion Survey also evaluates how quickly the companies are introducing new business models. The average regional score (4.15) exceeds the global average (4.04), while the average score of large companies is even higher (4.27). The champions in introduction of new business models are hotels and restaurants (4.70) as well as the financial sector (investment (4.50) and insurance (4.46) companies). The lowest scores are in the resource-based industries: mining (3.70), agriculture (3.82), production and distribution of electricity, gas and water (3.91). Alike

the industries, the gap between the Oblasts is about 1 score as well. Urbanized industrial Oblasts of Donetsk (4.51) and Kharkiv (4.43) along with Kyiv city (4.63) receive the highest scores; meantime Luhansk (3.65) and Chernihiv (3.70) have the lowest assessment. The companies cannot often cope by themselves with challenging or newly emergent objectives in IT, marketing and consulting and thus engage external consultants. It is indicative that only 5% of respondents said they engaged external consultants regularly and continuously, giving the maximum of 7 scores. Another 16% of companies engaged consultants fairly often (6 scores). Working with external consultants is obviously more typical for large businesses (4.16) than small ones (3.27). More than a half (51%) of large business executives say they engage external consultants more often and more intensively than on average in Ukraine (5 out of 7 scores), while the same shares of SMEs are just above one-third. These services are mostly demanded in finance (insurance companies (4.52) and banks (4.39)), being least needed for construction (2.89) and production and distribution of electricity, gas and water sector (2.96 scores). Such low scores, assessed by top manager in Ukraine’s regions, are clearly understandable if one takes into account the fact that introducing MIS solutions, international business standards and new business models normally requires professional external consultants, but that is not the case for most Ukrainian companies. A few exceptions can include e-document flow (relatively affordable for businesses) as well as marketing and customer relations (needed for sustainable sales).

LOW LEVEL OF FINANCIAL MARKET UNDERMINES COMPETITIVENESS A decline in the overall growth rate of the Ukraine’s economy is mostly due to the lack of financial resources which can be seen from the slowdown in investments. In the context of a credit crunch the companies have to increase their issuance of securities to raise capital, but they face restricted opportunities due to the small volume of Ukraine’s equity market. Additionally, in Ukraine there is a wide regional and industrial disparity in terms of opportunities for business financing. The World Economic Forum provides a comparable analysis of financial problems in The Financial Development Report. Ukraine occupies low positions almost across all pillars within the Financial Development Index 2012 calculated on the basis of this survey.

The difficult situation with financing can be explained by the implications of the financial crisis. However, low level of financial market development in Ukraine is also an important factor as some dimensions of the financial pillar have deteriorated over the last years

The country ranks very low in such indicators as financial access, ease of access to loans (51st out of 62), venture capital availability (54th), ease of access to credit (59th), financing through local equity market (61st) with the scores ranging between 2.2 and 2.4 (on a scale from 1 to 7; Table 3.3.A). As a result, Ukraine falls behind their peer countries on financial market development (Table 3.3.B). The key WEF’s survey, Global Competitiveness Index, does not provide an in-depth analysis of the financial markets and corporate finances however it does cover a wide range of countries. As seen from Fig. 3.17, over the last year Ukraine’s performance has deteriorated in almost all dimensions characterizing its financial market development and ability to raise investment. The country has lost its positions in the global ranking which means it has lost out in global competitiveness. The country has also received lower scores (except for the scores for financial services) which means losing pace in financial market development. The findings of the Ukrainian National Competitiveness Index show that in many of the Ukrainian Oblasts the situation is even worse than in Ukraine in general (Figure 3.18.).

ASSESSMENT OF FINANCIAL MARKET DEVELOPMENT AND INVESTMENTS IN REGIONS Financial services The Executive Opinion Survey studies the assessment of availability and affordability of financial services. The business executives were asked to assess the range of financial products to identify their availability. Also the prices for these products were assessed, considering the competition between the financial market participants to

Table 3.3A

Ukraine’s positions in Financial Development Index 2012 and its pillars

Index / pillars

Place (out of 62)

Financial Development Index

Score (out of 7) 2.56

Institutional environment

2.93

Business environment

3.57

Financial stability

3.14

Banking financial services Non-banking financial services Financial markets

2.30

1.95

1.40

Financial access

2.66

Source: World Economic Forum, The Financial Development Report, 2012.

Table 3.3B

Scores of Ukraine and their peer countries in Financial Development Index 2012

Place

Country

Score

Poland

3.41

Slovak Republic

3.34

Russia

3.30

Hungary

3.16

Kazakhstan

3.13

Romania

2.93

Ukraine

2.56

Source: World Economic Forum, The Financial Development Report, 2012.

identify the level of affordability of financial services. The Ukrainian Oblasts show quite an even performance on availability of financial services with a difference of only 1 score between the worst-performing (Vinnytsya (4.60 scores) and Chernivtsi (4.75)) and the best performing Oblasts of Dnipropetrovsk (5.17), Rivne (5.18) and Kharkiv (5.26). Two of the top Oblasts give the largest value added contribution to the financial activity of the aggregate GDP of Ukraine, with 9.9% and 11.3% respectively (by 2011 data), whilst availability of financial services in these Oblasts ranks the same as that of Turkey, placed 28th globally. The average score for Kyiv City, the largest value added contributor to financial activity (36.2%), is 5.07, which corresponds to the same level as Latvia (47th). This can be partially explained by the high concentration of large and mid-sized businesses in the capital which are more critical in selecting financial services and give lower assessment (4.89 and 4.94 respectively) compared with small business (5.04 scores). The same situation is observed in Donetsk Oblast where there is a concentration of large business sites: despite a high value added contribution in financial activity (8.9%) the scores for availability of financial services are close to the average (5.16, similar to Estonia, 38th place). When reviewing industry, mining companies (4.06), hotels and restaurants business (4.48) and agricultural companies (4.53) receive the lowest scores on availability of financial services. The best performing companies are in the financial sector: investment and insurance companies (5.42 and 5.44 respectively) and banks (6.04). Oblasts show quite an uneven performance in affordability of financial services. Kharkiv as well as Kyiv

CHAPTER 3. Level of business development is not sufficient for successful competition

3.8 Financing

Dynamics of indicators of financial market development and investments of Ukraine in GCI

5.0

4.5

4.0 Availability of financial services GCI, scores

CHAPTER 3. Level of business development is not sufficient for successful competition 56

Figure 3.17

FDI and technology transfer

3.5

Affordability of financial services Business impact of rules on FDI

3.0

Soundness of banks

2.5

Financing through local equity market Ease of access to loans Venture capital availability

2.0

1.5

2008

2009

2010

2011

2012

2013

Source: World Economic Forum, The Global Competitiveness Report, 2008-2013.

and Sumy Oblasts are well ahead of the others (4.64, 4.64, and 4.68; can be compared with the Slovak Rep., ranking 37th globally). Among the outsiders there are Luhansk (4.01), Vinnytsya (4.14), Mykolayiv (4.15) Oblasts, with scores of the same level as Macedoniaâ&#x20AC;&#x2122;s (84th globally). Business executives of mid-sized businesses and some representatives of the larger business show the biggest dissatisfaction with the tariffs (4.15 and 4.20 respectively), while small businesses gives the best assessment of affordability of financial services on average (4.44) due to the access to special offers. The industrial disparity relating to affordability of financial services is also observed with availability of these financial services. The resourced-based companies have the lowest scores: mining industry (3.55) and agriculture (4.03). Insurance companies, (4.82), banks (5.46) and hotels and restaurants (4.52) gain the highest scores. Banks and crediting In respect to production technologies and capacities, business development requires injections of financial resources, which will not immediately bring financial benefits. The opportunity to get access to loans ultimately improves business flexibility and its competitiveness. Ease of access to loans is poorly assessed in Mykolayiv (2.31) and Vinnytsya (2.51) Oblasts (at a level between Moldova (104th) and Latvia (96th), and also in the capital city of Kyiv (2.54). Western Oblasts of Ternopil (3.01), Rivne (3.09), and Lviv (3.09) perform slightly better, but their scores are still low (at the same level as Bulgaria, 39th globally). If reviewed by sector, executives of mining companies (2.43) as well as executives of companies operating in financial sector give the lowest assessment for the ease of access to loans: investment companies (2.42) and insurance companies (2.43), placed 100th globally. The best results are observed with companies in the electricity, gas and water sector (3.32) and in hotels and restaurants business (3.50).

The Oblasts which receive a first-rate assessment for their soundness of banks include Khmelnytsky (5.18 scores), Chernihiv (5.14) and Volyn (5.02) Oblasts, which rank similarly as Poland (54th in globally). The worst performing Oblasts are Kirovohrad (4.42 scores) and IvanoFrankivsk (4.44) as well as the capital city of Kyiv (4.51), with results worse than the rank of Kazakhstan (100th). If taken by sector, namely companies operating in the financial sector give the worst assessment of soundness of banks: investment (4.0) and insurance (4.37) companies, whilst executives of agricultural companies (5.0) and the banks themselves (5.58 scores) are more satisfied with this indicator and respectively. Equity and venture capital markets In addition to standard scheme for obtaining loans, companies have been using globally two other important sources for raising capital: equity market and venture capital financing.

Private investors often invest venture capital in new and often innovative business, in contrast to the standard stock market, as they are ready to take additional risks in order to gain higher profits

The Oblasts that scoring lowest in financing through local equity market indicator include Kirovohrad and Mykolayiv Oblasts (2.52 and 2.58 scores accordingly). Donetsk and Dnipropetrovsk Oblasts have the highest scores in this indicator (3.08 and 3.12 respectively, at the same level as Russia, 90th globally). Amongst the best performers there is also AR Crimea (3.03 scores). Business executives of electricity, gas and water sector companies and agricultural firms are more sceptical about the possibilities of the equity market (2.39 scores in both sectors). Business executives of banks and investment companies who are

Assessment of financial market development and investment indicators for Ukrainian regions and global economies Regions’ average Worst region

Best region

Worst country Availability of financial services

Best country

Affordability of financial services Ease of access to loans Soundness of banks

2.52

1.40

Venture capital availability

1.50

Business impact of rules on FDI

1.90

FDI and technology transfer

5.80

3.12 Dnipropetrovsk 4.60

2.39 Zaporizhzhya 3.66

1.70 3.00 2.96

6.70

5.18 Khmelnytsky

4.42

2.30

Financing through local equity market

4.90

3.09 Lviv

2.31

1.50

6.10

4.68 Sumy

4.01

2.30

6.40

5.26 Kharkiv

4.60

2.40

6.70

4.80 Sumy 4.77 Zakarpattya

6.30 7

Sources: World Economic Forum, The Global Competitiveness Report, 2013; Foundation for Effective Governance, Executive Opinion Survey, 2013.

directly engaged in stock market activity and thus feel more optimistic (3.15 and 3.27 respectively). Business executives within the processing and mining sectors believe they have very limited venture capital availability (2.07 and 2.10). At the same time executives of investment and insurance companies as well as hotels and restaurants business give high assessment of venture capital availability (2.44, 2.49 and 2.68 respectively). Mykolayiv and Sumy Oblasts experience the largest difficulties with venture capital availability (1.96 and 1.90 scores each, approximately 131st – 133rd place globally, at the same level as Bosnia and Herzegovina, and the Kyrgyz Rep.). There is other Oblasts with restricted venture capital availability, like Ivano-Frankivsk (2.01). Oblasts of Zhytomyr (2.36), Volyn (2.36) and Zaporizhzhya (2.39) receive relatively high assessment in this indicator (similar to the level as Romania (92nd) or Armenia (93rd)). However it is worth noting that in the regions, which develop innovation projects with venture capital, the scores in general are either above average or just close to average, for instance, in Kharkiv (2.17), Lviv (2.33), Dnipropetrovsk (2.33) Oblasts and in Kyiv City (2.28). Such results correspond to similar levels of Georgia (106th) or Croatia (110th). The opinion of Ukrainian business executives coincides with the international assessment of Ukraine’s attractiveness for venture investing. According to Global Venture Capital and Private Equity Country Attractiveness Index 2013 (compiled by IESE Business School with EY), Ukraine is in the second half of the rankings (69th out of 118 nations), between Croatia (65th) and Georgia (72nd), and falling down five positions during a year. Most peer countries, first of all Poland (28th) and Russia (40th), are more attractive to venture investors than Ukraine. Foreign direct investments The highest negative regulation impact on FDI is observed in Cherkasy (3.66) and Ivano-Frankivsk (3.82) Oblasts and in Kyiv City (3.77), with the scores at the

same level as Bulgaria (118th) and Russia (121st). The best performers in this indicator are Volyn (4.52) and Sumy (4.80) with the results equal to the positions of Georgia and Turkey (49th and 50th globally). The sectors with the lowest scores include the trade area, where recently a number of major foreign investors have left the Ukrainian market, and investment companies (3.73) which often act as mediators between foreign investors and local companies. Business executives of hotels and restaurants business (4.35), transportation and communication services (4.37) and mining (4.62) give highest assessments for this indicator that can be explained by additional industry regulation in these branches. The FDI inflows to Ukraine do not often bring new technologies. That is why business executives of large companies give a high assessment of FDI and technology transfer (4.17), whilst the assessment by medium companies’ executives corresponds to the national average (3.70). If taken by sector, among the leaders are transportation and communications sector (3.92), mining industry (3.93) and financial sector (4.14 for banks, 4.09 for insurance companies and 4.73 for investment companies). The Oblasts of Zaporizhzhya (2.96), Luhansk (3.37) and Kirovohrad (3.23) show the most negative assessment for FDI and technology transfer (similar to the bottom of the global ranking of 148th place), while some Western regions, Ivano-Frankivsk (4.39) and Zakarpattya (4.77) receive the most positive assessment of this dimension, similar to that of Kazakhstan (93rd). Ukraine’s centres of investment and innovation of Ukraine are slightly behind them, for instance, Kyiv City and Donetsk Oblasts have 4.36 and 4.10 respectively; that is the level of Bulgaria (107th) and Moldova (109th). According to the Survey the poorly developed financial market and unfavourable investment climate make Ukraine unattractive for foreign investors. Ukraine is not even included in the Foreign Direct Investment Confidence Index (compiled by A.T. Kearney), whilst its

CHAPTER 3. Level of business development is not sufficient for successful competition

Figure 3.18

CHAPTER 3. Level of business development is not sufficient for successful competition 58

neighbours perform reasonably well (Russia ranks 12th and Poland 23rd in Index 2012). Kyiv City is not in the list of Global Financial Centres Index (maintained by Z/Yen Group) although this Index does include Warsaw, Moscow, Saint-Petersburg, Tallinn and Budapest. In addition, in contrast to Poland, Russia and Hungary Ukraine is not included into the MSCI stock indices’ set since Ukraine is classified as a “frontier market”, and that is also amid the reasons why there is a lack of investors’ interest. On the other hand, Ukraine is assessed highly in terms of potential for raising investment. In the FDI Attraction Index vs FDI Potential Index Matrix 2011 (maintained by UNCTAD) Ukraine is “in line with expectations”, the same as Poland, Russia and Kazakhstan. Thus, Ukraine has very good investment potential but it still fails to generate a real investment flow. As a result of the relatively low level of FDI, restricted availability and affordability of financial services, Ukrainian businesses experience problems with access to financing which is so much needed for business development in the context of an ever growing global competitive market.

The study of business sophistication factors carried out within the framework of the Ukrainian National Competitiveness Index 2013 shows that low business development is a key constraint for improving Ukraineâ&#x20AC;&#x2122;s competitiveness. In addition, the country continues to suffer from the existing problems relating to poor institutional framework, deterioration in the number of macroeconomic sub-pillars and the loss of positions in some education and infrastructure dimensions, where the performance depends on, to a greater extent, the government role. In most cases, in terms of business sophistication, the Ukrainian business falls behind not only the leaders of the Global Competitiveness Index but also most other peer countries, the former Socialist countries and Soviet republics. Significant risks also arise as a result of a wide disparity within the business sophistication assessments. This happens also due to wide regional disparities (as a rule, large industrial and urban regions perform better), industrial disparities (often the situation is worse in resource-based sectors such as agriculture, electricity, gas and water sector, and mining industry) and sometimes as a result of differences depending on the size of the business (large businesses usually perform better in many indicators thanks to availability of significant resources, although sometimes small business perform better due to more flexibility). Subsequently, the existing differences in business sophistication can strengthen the disparities between the regions and industries. Ukrainian businesses are not managed well; this can be seen from the assessment of efficacy of corporate boards, reliance on professional management and implementation of management information systems in companies. Often enough Ukrainian businesses fail to give proper attention to strategic development prospects, that is confirmed by the low scores in business planning and engagement of consultants. In the soft factors group, there is a disregard of corporate social responsibility, reputation management and capacity to retain talent. At the same time, a number of tactic objectives, especially those relating to marketing and customer relations, are solved quite well. It is important to underline, that Ukrainian businesses become less innovative. There are very few regions with significant innovation development practices, while the overall situation in the country has become really critical over recent years. The regions and the country in whole keep on losing their positions in venture capital availability. The deterioration in the business innovation efficiency has become a long-term trend. In addition, Ukrainian businesses face restricted access to finances as a result of the low level of financial market development, in spite of the fact that the national financial sector is one of the most developed branches compared with other industries of the national economy.

Low level of Ukrainian business development and its weak ability to adapt to new changing conditions caused by globalization are the key reasons for low assessment of competitiveness of in whole

Ukrainian regions and the country

The situation is getting really dramatic in the context of tight economic integration of Ukraine (joining the WTO, setting up the Free Trade Areas with the CIS, the EU and a number of particular countries). Nevertheless, further integration of Ukrainian economy can help businesses to improve their business processes and hence make national business more civilized. As the Survey shows some Ukrainian regions and sectors are quite competitive globally by certain indicators of business sophistication. If all the regions and industries improve their positions to the level of the leaders, that will lead to significant improvement of Ukraineâ&#x20AC;&#x2122;s national competitiveness.

CHAPTER 3. Level of business development is not sufficient for successful competition

CONCLUSIONS

CHAPTER 3. Level of business development is not sufficient for successful competition

Table 3.4. Regions’ positions by business sophistication indicators and additional questions Ukrainian National Competitiveness Index

Adaptability

9.01

Availability of latest technologies

9.02

Firm-level technology absorption

11.07

Production process sophistication

addl. question

Corporate governance

Corporate ethics

How do you evaluate your company's ability to adapt to external shocks? (crisis, changes in the legislation)? For the last 5 years how did expenses on modernisation of fixed assets change in your company?

1.19

Efficacy of corporate boards

1.20

Protection of minority shareholders’ interests

1.21

Strength of investor protection

6.02

Extent of market dominance

7.07

Reliance on professional management

8.07

Regulation of securities exchanges

11.09

Willingness to delegate authority

1.03

Diversion of public funds

1.05

Irregular payments and bribes

1.06

Judicial independence

1.17

Ethical behavior of firms

addl. question

During last 5 years how often did your business partners/contractors not fulfill their commitments? How is reputation important for your business? Does your company spend money on social events? (not at all / significant amounts on a regular basis)

Corporate social responsibility

addl. question

a. Internal projects: social programs for employees b. Spatial development projects (in a town or area of business presence): infrastructure, ecology c. Community development projects: health and sport, education and culture, social care

Human resources

5.07

Local availability of specialized research and training services

5.08

Extent of staff training

7.01

Cooperation in labor-employer relations

7.02

Flexibility of wage determination

7.03

Hiring and firing practices

7.06

Pay and productivity

7.08

Country capacity to retain talent

7.09

Country capacity to attract talent

7.10

Female participation in labor force, ratio to men

12.06

Availability of scientists and engineers In your region are women's salaries similar to the salaries of men performing the same job?

addl. question

To what extent do business in your area provides women the same opportunities as men to move up the career ladder? Motivation system in your company (limited by material remuneration only / contains various non-financial incentives)? In your region is it easy to find the necessary specialists to business?

Innovations

11.04

Nature of competitive advantage

11.05

Value chain breadth

12.01

Capacity for innovation

12.02

Quality of scientific research institutions

12.03

Company spending on R&D

12.04

University-industry collaboration in R&D

12.05

Government procurement of advanced technology products

11.06

Control of international distribution How active are companies in your region in the implementation of new business models, organizational structures etc.? How developed system of procurement have businesses in your region (risk management, quality standards, etc.)?

Internal business processes

addl. question

How widely is e-document flow used in your company? Your company has implemented and is currently using automatic control systems, such as – ERP, CRM and so on? Business planning in your company (based on own intuition and experience / complex analysis using modern technologies)? Your company has implemented and is currently using international standards of quality control (for example, ISO 9000)? Your company attracts external consultants for its operations (such as strategy, marketing, IT)?

Financing

6.12

Business impact of rules on FDI

8.01

Availability of financial services

8.02

Affordability of financial services

8.03

Financing through local equity market

8.04

Ease of access to loans

8.05

Venture capital availability

8.06

Soundness of banks

9.03

FDI and technology transfer

Dnipropetrovsk

Poltava

Sevastopol

AR Crimea

Rivne

Khmelnytsky

Sumy

Ivano-Frankivsk

Vinnytsya

Volyn

Cherkasy

Mykolayiv

Zakarpattya

Luhansk

Chernivtsi

Chernihiv

Ternopil

Zhytomyr

Kherson

Kirovohrad

CHAPTER 3. Level of business development is not sufficient for successful competition

Donetsk 4

Zaporizhzhya

Odesa 3

KyivOblast

Kharkiv 2

Lviv

Kyiv 1

The Most Problematic Factors for Doing Business in Ukraine’s Regions

According to the Executive Opinion Survey, policy instability is the major hindrance to doing business in Ukraine. This opinion is shared by business executives from 21 out of 27 Ukrainian regions. The second most pressing problem for doing business is tax regulations which is the same as last year. This year, however, the number of respondents who mentioned tax regulations as a problematic factor has reduced by 2%. Only 5 Oblasts consider tax regulations as the more problematic factor for doing business (compared with 13 Oblasts in 2012). Corruption retains third place in the list (11.3% of respondents). These are the results of a special poll collecting the insight of 2,080 business executives in 27 regions of Ukraine (Figure 4.1). The survey’s data is not used to calculate the competitiveness index but it gives some understanding of major impediments to doing business in Ukrainian regions from a business perspective. The top five problems faced by business’ in Ukraine traditionally include inefficient government bureaucracy and tax rates. Thus, three out of five problematic factors refer to state institutional framework whilst two are connected with taxation. Policy instability is singled out as the most problematic factor for doing business in Chernihiv (22.5%) and Kharkiv (21.2%) Oblasts. Kirovohrad Oblast, AR Crimea and the City of Sevastopol do not see this as a problem. Sumy (17.7%), Zaporizhzhya (16.3%) and Mykolayiv (15%) Oblasts and the City of Sevastopol (15.5%) consider tax regulations as the most problematic factor for doing business in these Oblasts. This problem is of less importance in Poltava (11%) and Ivano-Frankovsk (11.3%) Oblasts. The problem of corruption causes much trouble in the City of Kyiv (15.3%) and Ternopil Oblast (14.4%) and is less widespread in Sumy and Chernivtsi Oblasts. Business executives of Cherkasy Oblast, and of Crimean Peninsula (AR Crimea and the City of Sevastopol) single out inefficient government bureaucracy as the biggest hindrance to doing business in their Oblasts (14.9%, 12.5% and 12.9% respectively). Sumy Oblast has the biggest problem with tax rates (16.8%), while it is of less concern in Kharkiv and Chernihiv oblasts (7.1%). Almost all western Oblasts experience problems with access to financing: Chernivtsi (10.9%), Khmelnytsky (8.8%) and Rivne (8.7%) Oblasts. Lviv and Zakarpattya Oblasts are the only exception (5% and 3.8% respectively). The Oblasts suffering from inadequate supply of infrastructure include Zakarpattya (7.2%), Chernivtsi (7.1%) and Kherson (6.6%) Oblasts. Business executives of Poltava, Chernihiv and Kirovohrad Oblasts are unsatisfied with inadequately educated workforce (8%, 7.3% and 7.2% respectively). The problem of local and national government instability in Chernivtsi Oblast is twice as bad as in Ukraine as a whole (11.2% against Ukraine’s average of 6.8%). Inflation remains a hindrance for businessmen of Vinnitsa and Zakarpattya Oblasts (8.9% and 8.6% respectively), whilst business executives in Poltava Oblast do not regard this as a serious problem (3.9%). Poltava Oblast suffers more than other Oblasts from minimal access to land plots (5.6%). Regional customs policy as usual presents a problem in Zakarpattya (4.4%) and Odesa (4.1%) Oblasts. The Executive Opinion Survey makes it possible to identify the most problematic factors for doing business

CHAPTER 4. The Most Problematic Factors for Doing Business in Ukraine’s Regions

CHAPTER 4

Most problematic factors for doing business – 2013 vs 2012 Policy instability

16.9%

Tax regulations

13.8%

Corruption

11.3%

Tax rates

10.0%

Inefficient government bureaucracy

9.9%

Local and national government instability

6.8%

Inflation

6.5%

Access to financing

6.5%

Inadequately educated workforce

4.8%

Inadequate supply of infrastructure

4.1%

Access to land plots

2.4%

Restrictive labour regulations

2.1%

Regional customs policy

2.0%

Foreign currency regulations

1.6%

Crime and theft

1.3%

15.2% 15.7% 12.2% 9.7% 9.3% 6.5% 7.7% 5.8% 4.9% 3.7% 2.4% 2.0% 2.6%

2013 2012

1.1% 1.2%

10%

15%

20%

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

Extractive industry

Other services

Investment banking

Manufacturing

Hotels and restaurants

Electricity, water and gas supply

Agriculture

Insurance

Construction

Wholesale and retail trade

Transport and communications

Most problematic factors for business by industry, share of respondents who picked a factor as the most problematic

Banking

Table 4.1

Ukraine

CHAPTER 4. The Most Problematic Factors for Doing Business in Ukraine’s Regions 64

Figure 4.1

Policy instability

16.9

16.5

20.5

17.0

16.5

16.0

17.8

15.9

19.3

22.9

18.2

16.4

14.7

Tax regulations

13.8

9.9

17.2

13.2

23.0

15.4

8.7

10.7

10.9

12.1

15.9

14.7

Corruption

11.3

14.8

6.1

12.5

15.1

10.8

7.2

8.3

9.4

13.5

13.8

12.6

9.6

Tax rates

10.0

6.0

9.8

9.4

8.6

11.5

12.1

11.2

7.6

5.0

9.6

11.7

8.8

Inefficient government bureaucracy

9.9

12.2

8.7

10.2

18.0

9.8

12.1

7.8

10.2

9.5

10.0

8.7

11.6

Local and national government instability

6.8

7.3

10.0

7.2

6.2

8.7

8.9

5.7

8.2

6.6

Inflation

6.5

9.0

5.9

7.0

0.7

5.4

11.8

7.0

10.6

4.5

7.4

5.6

Access to financing

6.5

5.0

6.0

4.3

6.0

12.8

7.2

4.3

11.4

4.0

7.7

Inadequately educated workforce

4.8

2.2

3.1

5.4

4.3

6.4

5.0

5.3

5.2

3.4

3.8

3.5

3.7

Inadequate supply of infrastructure

4.1

4.9

1.5

4.1

3.6

5.9

7.1

4.2

7.5

3.4

2.8

6.1

Access to land plots

2.4

1.1

7.2

2.4

1.5

3.1

0.9

8.0

0.2

1.9

1.7

1.2

Restrictive labour regulations

2.1

1.9

1.7

2.2

2.0

5.3

2.2

1.9

1.6

2.3

Regional customs policy

2.0

0.8

0.9

1.4

3.0

0.9

0.6

0.5

0.3

2.8

3.9

Foreign currency regulations

1.6

4.6

0.2

1.1

6.5

1.7

0.6

0.2

0.8

1.0

0.6

2.2

1.9

1.3

2.4

3.1

1.2

1.4

0.8

0.6

1.9

2.1

0.8

0.4

1.4

1.6

Crime and theft

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

251 and more employees

Policy instability

16.9

16.6

17.2

17.4

Tax regulations

13.8

13.5

13.9

15.6

Corruption

11.3

11.7

11.2

9.3

Tax rates

10.0

10.3

9.9

8.5

Inefficient government bureaucracy

9.9

10.1

9.0

Local and national government instability

6.8

7.3

6.2

5.9

Inflation

6.5

6.8

6.2

5.6

Access to financing

6.5

6.2

6.7

7.6

Inadequately educated workforce

4.8

4.5

5.1

5.6

Inadequate supply of infrastructure

4.1

4.3

3.6

4.8

Access to land plots

2.4

2.0

3.2

2.4

Restrictive labour regulations

2.1

2.2

1.9

1.8

Regional customs policy

2.0

1.7

2.0

3.3

Foreign currency regulations

1.6

1.7

1.4

2.0

1.3

1.2

Crime and theft

Source: Foundation for Effective Governance, Executive Opinion Survey, 2013

CHAPTER 4. The Most Problematic Factors for Doing Business in Ukraineâ&#x20AC;&#x2122;s Regions

51-250 employees

Most problematic factors for business by size, share of respondents who picked a factor as the most problematic

20-50 employees

Table 4.2

Ukraine

in breakdown by Oblasts (27) as well as by sectors of economy and business size, according to the classification applied by the World Economic Forum. The survey demonstrates that all industries consider policy instability as their priority issue, except investment companies face their biggest problems with tax regulations (Table 4.1). Other companies suffering from the problem of tax regulations include insurance companies (22.9%) and the mining industry (20.5%). Transport business is worried about tax regulations (14.7%), thus, investment companies (23%), mining business (17.2%) and trade companies (15.9%) single out tax regulations as their priority problem. Corruption is a real trouble in the financial sector, for investment (15.1%) and insurance (13.5%) companies as well as banks (14.8%), and for construction (13.8%) companies. At the same time, mining (6.1%), energy power (8.3%) and hospitality and restaurant (7.2%) businesses do not see corruption as the most problematic factor for doing business. Energy power and construction companies experience problems with access to financing (12.8% and 11.4% respectively), while hospitality and restaurant business do not consider this a problem (0%). On the other hand, hospitality and restaurant business experiences great problems with restrictive labour regulations (5.3%). Investment companies and banks raise concerns about foreign currency regulations (4.6%). Inadequate supply of infrastructure presents a problem for insurance (7.5%), energy power (7.1%) and transportation (6.1%) companies. Inefficient government bureaucracy is considered amongst the top five problematic factors for doing business in all sectors of economy (9.9%). With regards to investment companies however it is their major concern (18%). Mining companies suffer more than others from inadequately educated workforce (6.4%), whilst this is not a major problem for banks (2.2%). Tax rates present a burden for hospitality and restaurant businessâ&#x20AC;&#x2122; (12.1%), trade companies (11.7%) and mining industry (11.5%). Banks and insurance companies do not experience big difficulties with tax rates (5%). Inflation is the major area of concern for hospitality and restaurant business (11.8%), insurance companies (10.6%) and banks (9%), whilst investment companies do not share this concern (0.7%). Mining (7.2%) and agricultural companies (8%) experience traditional problems with access to land plots. The top three problems are the same for companies of all sizes, either small, or medium, or big business (Table 4.2). There is a direct dependence between the company size and priority of policy instability and tax regulations, whilst in terms of corruption it is an inverse dependence; the bigger the company the fewer problems it faces with corruption. Medium-sized companies suffer less from inadequate supply of infrastructure (3.6% against Ukraineâ&#x20AC;&#x2122;s average of 4.1%). At the same time they experience serious problems with access to land plots (3.2% against the average sample responses of 2.4%). Medium-sized companies suffer less than other businesses from inefficient government bureaucracy (10.1%). Tax rates are more important for small business (10.3%) than for big corporations (8.5%). Regional customs policy is more important for big businesses than small ones: (it is about twice as high: 3.3% against 1.7%).

CHAPTER 4. The Most Problematic Factors for Doing Business in Ukraineâ&#x20AC;&#x2122;s Regions 66

Interesting facts: zzOver

the last year the problems relating to access to land plots have become four times more important in Poltava and Ternopil Oblasts. This is the largest increase across the board. Tax rates can be attributed as the primary problem in Sumy Oblast (+7.9% of responses in the Oblast). zzThe problem of access to land plots was mentioned four times less in Cherkasy Oblast compared with 2012, whilst the problem of regional customs policy is not perceived as an obstacle to doing business anymore in Chernivtsi Oblast. The biggest reduction in the number of responses refers to inflation in Chernihiv Oblast (-8.9%). zzThe problem of inadequate supply of infrastructure is four times more important for businesses in mountain and border Zakarpattya and Chernivtsi oblasts than for Donetsk business community. Business executives of Chernivtsi Oblast are three times more concerned about access to financing than in Zakarpattya Oblast. zzThe problem of inadequately educated workforce is on average twice more important for Poltava Oblast than in Ukraine. At the same time this problem is twice less important in Ivano-Frankovsk Oblast. zzFor the respondents of Rivne Oblast crime and theft are twice as frequently mentioned (compared with the national average indicator), while Zakarpattya and Chernivtsi oblasts do not see it as a problem at all. zzSumy Oblast demonstrates the largest concentration of responses referring to problematic factors for doing business (the first three factors make 51.5% of all responses). In AR Crimea the first three factors account for 36.5% of responses in the Oblast. zzThis year business executives of mining companies are less concerned about the problem of corruption (down from 15.2% to 6.1%). At the same time tax regulations and tax rates gain 12.7% (first of all among executives of investment companies) and thus account for one third of all answers in the sector. zzBusiness executives of investment companies are worried about tax regulations. This problem is twice more important for investment companies (compared with the national average indicator) and three times more important for hospitality and restaurant business. zzCrime and theft is a major area of concern for banks (2.4%) and mining companies (3.1%). Construction companies do not include this as a priority concern (0.4%). zzAccess to financing is not a problem for hospitality and restaurant businesses. In 2013 it has not been mentioned by the corresponding respondents. On the contrary, construction companies and suppliers of electricity, gas and water see it as a major area of concern (a two-fold increase year-on-year); for the latter this is problem number two on their list. zzInefficient government bureaucracy (including permit and licensing system for doing business) is on top of the agenda of investment companies: they mention it twice more frequently than representatives of energygenerating, mining and trade companies. zzCorruption is no longer in the list of the top five hindrances for mining companies.

Ukrainian regionsâ&#x20AC;&#x2122; results

CHAPTER 5. Ukrainian regions’ results

AR Crimea

Rank 11

Dynamics of Competitiveness Index, score

zzAR Crimea has shown relatively good performance in such pillars

as infrastructure and business sophistication zzAR Crimea weaknesses are in labour market efficiency,

4.00

3.94

institutions, higher education and training

3.77

zzThe most problematic factors for businesses in the region are

inefficient government bureaucracy, policy instability and tax regulations 2011

2012

2013

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.68

4.26

4.20

5.75

4.32

4.09

4.47

4.10

3.05

2.31

4.05

2.97

2012

3.61

4.10

4.52

5.71

4.14

3.86

4.64

3.85

2.96

2.24

3.93

2.77

2011

3.58

3.99

4.12

5.65

4.09

3.54

4.63

3.64

2.68

1.92

3.81

2.63

In 2013 the Autonomous Republic of Crimea continues its upward trend in the Ukrainian National Competitiveness Index, achieving 11th position for this year (compared with 19th in 2012). However, its aggregate score of 4 points corresponds to 90th place globally. The AR of Crimea has improved its performance in three sub-indices: basic requirements (6th, up by five places), efficiency enhancers (18th, up by four places) and innovation and sophistication factors (11th, up by nine places). The innovation potential of the region is above the Ukraine’s average (3.36 points), at the same level of Slovak Republic (3.49). Compared with 2012 the region has improved its performance across 7 pillars of competitiveness. The regions improvements are in innovations (16th, up by nine places), goods market efficiency (15th, up by nine places), Figure 5.1

financial market development (17th, up by eight places), and health and primary education (12th, up by seven places). However at the same time the assessment of public institutions and market size has deteriorated (25th and 11th, downshift by 2 and 1 positions respectively). The assessment of the labour market efficiency remains weak (26th nationally and 84th globally). AR Crimea continues to rank highly in the infrastructure pillar: 5th among the 27 Ukrainian regions (6th in 2011) and 59th overall in the global ranking, at the same level as Latvia (4.24 points) and Georgia (4.31 points). The region receives good scores for quality of port infrastructure (3rd), available airline seat (4th) and for the quality of air transport infrastructure (4th). However at the same time the quality of electricity supply is a problem as the region ranks only 23rd nationally and 86th globally.

AR Crimea’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.00

Institutions

3.68

Infrastructure

4.26

Macroeconomic environment

4.20

Health and primary education

5.75

Higher education and training

4.32

Goods market efficiency

4.09

Labor market efficiency

4.47

Financial market development

4.10

Technological readiness

3.05

Market size

2.31

Business sophistication

4.05

Innovation

2.97 1

AR Crimea Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

The Republic ranks 8th among 27 regions of Ukraine by population (4.3%) and 11th by share in Ukraine’s GDP. The gross regional product of AR Crimea per capita is UAH 19,467 or 68.3% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

AR Crimea continues to perform well in business sophistication in the national ranking (5th, 4.05 points), which is approximately the same level as Poland (4.06) and Latvia (4.01). This is first of all due to the good state of the cluster development (3rd), nature of competitive advantage (2nd) and value chain breadth (5th). AR Crimea trails behind other regions in the production process sophistication and local supplier quality (both 25th nationally). In the global ranking the region is situated in the bottom half of the rankings: 121st and 108th respectively. This region benefits from its market size, which remains its most competitive advantage: 11th (2.31 points) nationally, however it looks less optimistic in the global ranking in 134th place. AR Crimea, for the third year in a row, has shown a low labour market efficiency ranking: 26th (4.47 points) nationally and 84th globally. The main reasons for this are that there is low flexibility of wage determination (26th), low level of women in labour force (26th), extent and effect of taxation (25th), poor hiring and firing practices (24th) and poor reliance on professional management (20th). For 2013 the region’s institutions framework has deteriorated resulting in the region dropping from 23rd to 25th place which corresponds to 84th place globally, which is at the level of Iran (3.68) and Hungary (3.67). In 2013 the region has shown a significant drop of 7 places to the last place, 27th, in efficacy of corporate boards and a drop of 6 places to 25th in efficiency of legal framework in settling disputes. It can be seen that as of last year businesses suffer from business costs of terrorism (27th), business costs of crime and violence (27th) and poor transparency of government policymaking (26th). Despite a slight improvement in the higher education and training pillar the region still ranks at a low 22nd place among the Ukrainian regions (4.32), which corresponds to 63rd place in the global ranking. The biggest weaknesses of AR Crimea includes the quality of management schools (27th), quality of the educational system (25th), tertiary education enrolment (24th) and Internet access in schools (23rd). The most problematic factors for doing business have changed in the region over the past year. According to Executive Opinion Survey 2013 the largest hindrance for doing business in AR Crimea is inefficient government bureaucracy (12.5%). Other important hindrances include policy instability (12.3%), tax regulations (11.6%) and corruption (11%). Business in this region is very much concerned with tax rates (10.7%, which is above Ukraine’s average) however business executives of AR Crimea are less concerned with regional customs policy, foreign currency regulations and crime and theft.

CHAPTER 5. Ukrainian regions’ results

Cherkasy

Rank 18

Dynamics of Competitiveness Index, score

zzCherkasy has fallen to 18th position in the national ranking,

however whilst outperforming Mykolayiv it has been overtaken by Volyn. This low position is due to the region’s weak performance in innovations, goods market efficiency and institutions 3.81

zzTechnological readiness, business sophistication and labour

3.94

3.96

2012

2013

market efficiency remain the strongest pillars in the oblast zzCherkasy’s largest barriers for businesses include policy

instability, inefficient government bureaucracy and tax regulations 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.77

4.20

5.74

4.52

4.01

4.64

4.15

3.14

2.02

3.99

2.82

2012

3.71

3.67

4.52

5.74

4.45

3.83

4.83

3.98

3.11

1.92

3.85

2.80

2011

3.74

3.57

4.05

5.68

4.46

3.74

4.84

3.76

2.83

1.72

3.69

2.81

In the National Competitiveness ranking 2013, Cherkasy has dropped two places over two, being overtaken by Volyn, but outperforming Mykolayiv. Over the last period the region has improved its competitiveness index by 0.15 points to 3.96, which is 0.08 below Ukraine’s score in the global ranking. Cherkasy’s overall competitiveness index corresponds to 90th place in the global ranking of 148 nations. The region performs slightly better than Moldova but not as well as Bosnia and Herzegovina, and below all CEE countries and most of the CIS states. With its highest score in efficiency enhancers sub-index (13th in Ukraine and 95th globally), Cherkasy still falls far behind CEE countries. The oblast has improved in ten out of twelve pillars compared with 2012, showing the best performance in goods market efficiency (plus 0.19 scores), financial market Figure 5.2

development (plus 0.17 scores) and business sophistication (plus 0.14 scores). The labour market efficiency has significantly dropped (minus 0.19 scores), yet remaining one of the relative competitive advantages of the region compared to the 148 nations. Technological readiness, business sophistication and labour market efficiency are the region’s strengths. Low performance in innovations, goods market efficiency and institutions impedes competitive growth. The oblast is lower than18th position in all of these aforementioned pillars in the national ranking. Although Cherkasy ranks 8th for technological readiness in Ukraine, it has no competitive advantages globally, taking a low 102nd place among the 148 nations, residing between Vietnam and Gonduras. The oblast falls considerably behind countries on availability of latest technologies (9th nationally and 134th globally) and FDI

Cherkasy’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.96

Institutions

3.77

Infrastructure

3.77

Macroeconomic environment

4.20

Health and primary education

5.74

Higher education and training

4.52

Goods market efficiency

4.01

Labor market efficiency

4.64

Financial market development

4.15

Technological readiness

3.14

Market size

2.02

Business sophistication

3.99

Innovation

2.82 1

Cherkasy Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

In contrast to Ukraine’s average, inefficient government bureaucracy (including inefficient regulatory approval system) is mentioned as the second most problematic factor in the oblast. Tax regulations (11.6%), corruption (8.2%), access to financing (5.3%) and poor infrastructure (3.6%) are of less concern for Cherkasy business. Cherkasy ranks 15th out of 27 Ukrainian regions by population (2.8%) and 14th by share in the national GDP (2.1%). The gross regional product of the oblast per capita is UAH 21,082 or 74.0% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

and technology transfer (9th and 114th respectively), which proves the extensive nature of its existing FDI. In terms of individual technological readiness, the region has a big number of Internet users (8th in Ukraine and 91st out of 148 nations). Cherkasy performs well in business sophistication. It takes 8th position in the national ranking and 69th in the global ranking and resides between Latvia and Azerbaijan, considerably outperforming Russia and Bulgaria. The region has high scores for the local supplier quantity (10th in Ukraine and 64th in the world), local supplier and quality (2nd and 77th) as well as control of international distribution (4th and 15th). At the same time, Cherkasy scores low on the extent of marketing (22nd and 92nd) and value chain breadth (21st and 109th). The oblast delivers a relatively strong performance in labour market efficiency on the global scale, ranking 34th, the same as Taiwan and China, though it just takes 11th place in the national ranking. The high position of the region and Ukraine as a whole is attributed to favourable hiring and firing practices (3rd nationally and 20th globally) and a high proportion of women in the labour force (9th and 31st). The oblast has problems with its capacity to retain (22nd and 129th) and attract new talent (18th and 128th). No Ukrainian region has performed well in this indicator. Cherkasy has taken its lowest place (25th) for innovations. This relates to 119th position in the global report, below all CEE and CIS countries (except Kyrgyz Republic and Moldova). The oblast scores low for university-industry collaboration in R&D (25th in Ukraine and 137th out of the 148 nations), availability of scientists and engineers (20th and 129th) and company spending on R&D (20th and 117th). Weak performance in government procurement of advanced technology products does not contribute to development of innovations either (15th nationally and 117th globally). Despite the current situation, business executives positively assess the region’s innovations potential – the capacity for innovation (18th and 40th). The oblast has very low scores for goods market efficiency (25th and 104th). Nevertheless, Russia, Romania and Moldova are placed even lower. In the pillar, the most problematic indicators are agricultural policy costs (26th in Ukraine and 133rd in the world), anti-monopoly policy (24th and 136th) and prevalence of foreign ownership (22nd and 148th). Yet quality of demand conditions in the region corresponds to a high 50th position in the global report; degree of customer orientation is 43rd; buyer sophistication is 59th. On the institutions pillar, Cherkasy ranks 18th in the national ranking, matching 80th position globally the same as Thailand or Brazil. The region has gained very low scores for a number of indicators even by global standards: protection of minority shareholders’ interests (27th in Ukraine and 143rd out of the 148 nations), public trust of politicians (26th and 111th) and judicial independence (20th and 116th). Yet the oblast has a low diversion of public funds (19th and 60th). At the same time, Cherkasy’s public security corresponds to 62nd position in the global report and the efficacy of corporate boards is in 26th position. Regional businessmen regard policy instability (18.4%) as the most problematic factor for doing business.

CHAPTER 5. Ukrainian regions’ results

Chernihiv

Rank 23

Dynamics of Competitiveness Index, score

zzChernihiv Oblast has moved up by one place this year to 23rd

position, overtaking Ternopol Oblast. The low position for this region in the national ranking results is due to weak assessment of its innovations, higher education and training and goods market efficiency zzThe oblast has the highest scores in labour market efficiency,

3.87

3.93

2012

2013

3.68

financial market development and institutions zzPolicy instability, tax regulations and corruption are the greatest

obstacles for doing business in the Chernihiv Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.92

3.94

4.20

5.63

4.18

4.03

4.76

4.16

2.93

1.89

3.81

2.72

2012

3.83

3.76

4.52

5.63

4.15

3.82

4.93

3.96

2.82

1.79

3.65

2.58

2011

3.71

3.53

3.98

5.58

4.08

3.61

4.83

3.73

2.63

1.56

3.50

2.47

In 2013 Chernihiv Oblast ranked 23rd in the national ranking, one place up from last year, overtaking Ternopol Oblast and below Chernivtsi Oblast. Over the last two years Chernihiv Oblast has improved its performance in the national ranking by 0.25 scores to 3.93 which is still below the Ukraine’s score in the global ranking. Chernihiv Oblast is ranked 93rd out of 148 nations, sharing the same score as Moldova but far behind Russia and Georgia. Chernihiv shows strong performance in one of three sub-indices referring to basic requirements: the region is ranked 93rd globally which is lower than most comparable countries. Chernihiv Oblast has improved its scores in 10 out of 12 pillars of competitiveness since last year. It features a notable improvement in goods market efficiency (plus 0.22), financial market development (plus 0.2) and Figure 5.3

infrastructure (plus 0.18). The Oblast’s strengths lie with their labour market efficiency, financial market development and institutions. However at the same time there has been a sizeable deterioration in the labour market efficiency (minus 0.16) but it is still one of its relative competitive advantages compared with the other 148 nations. The Oblast receives a poor assessment for its innovations, higher education and training and goods market efficiency as it is placed in the bottom half of the national ranking in all these dimensions. The region is placed second in the national ranking for labour market efficiency, which ensures its competitive advantage in the global ranking: the oblast ranks 26th out of the 148 nations which is the same level as Latvia and Azerbaijan. The region is successful in the flexibility of wage determination in Ukraine (ranking 4th place

Chernihiv’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.93

Institutions

3.92

Infrastructure

3.94

Macroeconomic environment

4.20

Health and primary education

5.63

Higher education and training

4.18

Goods market efficiency

4.03

Labor market efficiency

4.76

Financial market development

4.16

Technological readiness

2.93

Market size

1.89

Business sophistication

3.81

Innovation

2.72 1

Chernihiv Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

The biggest obstacle for doing business in Chernihiv Oblast is policy instability (this was the view of 22.5% of respondents, this is threefold more than average for this region). Other important obstacles include tax policy (12.2%) and corruption (11%). These indicators are slightly lower than Ukraineâ&#x20AC;&#x2122;s average. At the same time the region suffers more than other Ukrainian regions from inefficient government bureaucracy (10.5%), inadequately educated workforce (7.3%) and inadequate supply of infrastructure (6.4%). Business executives in Chernihiv Oblast are less concerned with the problems of tax rates and local and national government instability (7.1% and 4.8% respectively).

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

nationally and 41st place globally) and in the proportion of women in labour force (2nd and 14th places respectively). At the same time, Chernihiv Oblast faces problems with the capacity to retain experts (17th nationally and 123rd globally) and the capacity to attract new experts (23rd and 132nd respectively). The Oblast ranks relatively high, 10th place, in the financial market development which corresponds to 62nd place in the global ranking. This places Chernihiv Oblast ahead of Romania or Bulgaria,. The Oblast shows good performance in stability of its banks (2nd nationally and 64th globally) and affordability of financial services (7th and 62nd respectively). However, it experiences problems with the stock market as does everywhere in Ukraine: the Oblast ranks 21st in the national ranking and 114th globally in financing through local equity market and 19th and 126th respectively in regulation of securities exchange. The oblast ranks 10th (70th globally) in the institution pillar, behind well-performing Kazakhstan, Turkey, and Azerbaijan, however far ahead of the Czech and Slovak Republics, and Russia. The Oblast benefits from strong public institutions: diversion of public funds (2nd nationally and 43rd globally), favouritism in decisions of government officials (2nd and 46th respectively) and irregular payments and bribes (1st and 54th respectively). However, the situation is absolutely different in respect to private institutions: the oblast suffers from poor corporate ethics (21st nationally and 115th globally) and poor auditing and reporting standards (being positioned relatively high in the national ranking the Oblast is ranked low at 131st overall). Chernihiv Oblast still remains an outsider in innovations: 26th nationally and 126th globally with the same level of performance as Albania or Georgia. The obstacles to developing innovations in this region include university-industry collaboration in R&D (27th nationally and 142nd globally), availability of scientists and engineers (26th nationally, 142nd globally) and quality of scientific research institutions (24th and 116th respectively). At the same time company spending on R&D is quite high compared with other regions (11th and 98th respectively). Chernihiv Oblast is among the outsiders in regards to higher education and training: it ranks 25th in the national ranking and 77th in the global ranking. The Oblast is significantly lower in the global ranking than most countries of CEE and the CIS (however it is ahead of Armenia, Azerbaijan and Kyrgyz Republic). The oblast suffers from a small extent of staff training (17th and 141st) and low availability of research and training services (27th and 84th). Tertiary education enrolment is the only indicator which equals to the national average (13th) and it is a competitive advantage of the Oblast in the global ranking (55th). Goods market efficiency remains a challenge for this region as it still ranks in the bottom half of the ranking (24th and 103rd), behind most countries of CEE, but better than some CIS states (like Moldova, Russia and Kyrgyz Republic). Chernihiv Oblast is ranked a low 27th on intensity of local competition (132nd globally), a low 26th on effectiveness of antimonopoly policy (136th globally) and a low 26th on prevalence of foreign ownership (149th in the global ranking). The Oblast benefits only from a lack of trade barriers (5th nationally and 53rd globally).

Chernihiv Oblast ranks 22nd among 27 regions of Ukraine by population (2.4%) and 19th by share in Ukraine GDP (1.6%). The gross regional product of the oblast per capita is UAH 19,357 or 67.9% of Ukraineâ&#x20AC;&#x2122;s average.

CHAPTER 5. Ukrainian regions’ results

Chernivtsi

Rank 22

Dynamics of Competitiveness Index, score

zzThe Oblast receives its highest scores for health and primary

education, goods market efficiency, institutions and innovation. zzIt loses out to most regions by market size, business sophistication

and infrastructure.

3.95

2012

2013

3.77

zzPolicy instability, tax regulations, local and national government

instability are the most problematic factors for doing business in the region. 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.95

3.66

4.20

5.96

4.49

4.21

4.63

4.09

2.99

1.41

3.99

3.12

2012

4.03

3.60

4.52

6.00

4.42

4.03

4.86

4.04

2.92

1.31

3.80

2.98

2011

3.92

3.61

3.87

5.94

4.30

3.74

4.85

3.94

2.71

1.12

3.58

2.67

Chernivtsi has annually fallen 6 positions to rank 22nd in 2013 with 3.95 points in the Ukrainian National Competitiveness Report and 90th in the GCI. The score is comparable with Greece (3.93) and Moldova (3.94). Chernivtsi achieves a significant progress only in innovation and sophistication factors gaining 10 places (7th place in the Ukrainian National Competitiveness Index 2013), above the national average (3.36) and matches the level of Hungary (3.60). However, the region has been performing low in the efficiency enhancers for two years running (24th place) and losing two spots in basic requirements (8th place). Since last year Chernivtsi has gained ground in four pillars: business sophistication at 10th (up 11 places), innovation at 8th (up 5 places), technological readiness at 17th (up 3 places) and goods market efficiency at 3rd (up Figure 5.4

2 places), with exception of labor market efficiency (down 11 spots), financial market development (down 10 spots) and institutions (down 4 spots). Health and primary education (2nd place, 5.96 points) remain competitive advantage of the oblast as compared with 148 countries. In 2013, the region performs better than Ukraine’s average (5.84), at the level of the 52nd place globally (Lithuania with 5.97 and Bulgaria with 6.00). The high positions come firstly from strong results in the area of primary education quality (1st place) and enrollment rate (7th place), low tuberculosis incidence (2nd place), low HIV prevalence (3rd place) and comparatively high life expectancy (5th place). Over the last year Chernivtsi has improved scores for goods market efficiency (up 2 places), ranking 3rd in the national index. The score corresponds to the level of

Chernivtsi’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.95

Institutions

3.95

Infrastructure

3.66

Macroeconomic environment

4.20

Health and primary education

5.96

Higher education and training

4.49

Goods market efficiency

4.21

Labor market efficiency

4.63

Financial market development

4.09

Technological readiness

2.99

Market size

1.41

Business sophistication

3.99

Innovation

3.12 1

Chernivtsi Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

port infrastructure (148th place), available seat kilometers (114th place) and the quality of roads (122nd place). The oblast earns low scores in almost every indicator of the pillar with the worst being the quality of roads and port infrastructure (both 26th place), railroad infrastructure and electricity supply (both 24th place). Corporate executives believe that policy instability (16.1%), tax regulations (12.5%) and local and national government instability (11.2%) are the biggest hurdles for doing business in the region. Local businesses are more concerned than their peers across Ukraine with access to financing, inadequate supply of infrastructure and inadequately educated workforce. At the same time, the restrictive labor regulations, inefficient government bureaucracy and corruption are of less priority.

CHAPTER 5. Ukrainian regions’ results

Slovakia (4.24), Bulgaria (4.19) and Hungary (4.23) in the GCI. The upsurge is driven by high effectiveness of antimonopoly policy (2nd place, up 1 place), low burden of customs procedures (1st place, up 5 place) and business impact of rules on FDI (4th, same as last year). However, the score for the last indicator corresponds to a low 94th place in the global ranking. At the same time, the oblast falls in terms of intensity of local competition (25th place) and imports as a percentage of GDP (26th place), which corresponds to the lowest rank in the GCI (148th place). Chernivtsi displays worse performance in institutions as compared with 2012 (losing four places) yet the pillar remains its competitive advantage as the region ranks 6th in Ukraine and 68th in the world. The score is at the level of Georgia (3.95) and Poland (3.93). Almost every indicator of the region is lower in 2013 except for business costs of terrorism (5th place, up 2 positions), business costs of crime and violence (4th place, up 4 positions) and protection of minority shareholders’ interests (14th, up 3 positions). Among competitive strengths are public trust of politicians (3rd nationally and 83rd globally), efficiency of legal framework in settling disputes (4th place and 82nd place), efficiency of legal framework in challenging regulations (1st and 72nd ) and reliability of police services (4th place and 59th place). The indicators restricting further growth of the pillar include efficacy of corporate boards (26th place and 55th place) and intellectual property protection (25th place and 106th place). Chernivtsi has climbed five positions on the innovation pillar year on year to rank 8th. The competitive advantage is relative as the result is at the level of 80th place globally. The oblast has improved its performance in innovation due to higher number of PCT patent applications (10th place, up 10 places), higher company spending on R&D (14th place, up 9 places), government procurement of advanced technology products (14th place, up 5 places) and the quality of scientific research institutions (6th, up 4 places). Though the indicators within the innovation pillar have shown progress, such area as intellectual property protection (25th place) is of concern, ranking 106th globally. Market size (1.41 points) is traditionally one of the weakest pillars for Chernivtsi as the region has taken 26th place for two years in Ukraine and the last 148th spot in the global index. The region ranks at the bottom in two indicators of the pillar: domestic market size index and foreign market size index (26th and 27th respectively). For the past year the oblast has lost 10 places on the financial market development pillar to rank 18th in the national index that corresponds to 64th position in the GCI. Yet it is higher than the score of Georgia, Hungary, Bulgaria – and Ukraine’s average. Chernivtsi shows the weakest results in availability of financial services (26th place), financing through local equity market (24th place), regulation of securities exchanges (18th place) and affordability of financial services (17th place). Soundness of banks (7th place in Ukraine and 74th globally) remains a relative competitive advantage of the region, although it has lost some of its strength. As in the previous year, the oblast takes a low 18th place on infrastructure in Ukraine or 85th in the world. Benchmarking against the global index shows that Chernivtsi has the biggest challenges in the quality of

Chernivtsi Oblast ranks 26th both by population (2%) and by share in Ukraine’s GDP (0.9%) amid 27 regions. The gross regional product per capita is UAH 13,228 or 46.4% of the national average.

CHAPTER 5. Ukrainian regions’ results

Dnipropetrovsk

Rank 5

Dynamics of Competitiveness Index, score

zzCompetitive advantages of Dnipropetrovsk Oblast include

business sophistication, innovations and market size

4.10

4.16

4.15

2011

2012

2013

zzIt is still behind many other regions in health and primary

education and institutions zzThe largest barriers for businesses in Dnipropetrovsk Oblast

include policy instability, tax regulations and corruption

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.70

4.11

4.20

5.60

4.88

4.09

4.61

4.19

3.18

3.13

4.13

3.40

2012

3.70

3.99

4.52

5.63

4.73

4.03

4.85

4.08

3.34

3.06

4.14

3.30

2011

3.71

4.00

4.21

5.67

4.68

3.99

4.87

3.98

3.30

2.88

4.18

3.23

In 2013 Dnipropetrovsk Oblast lost two places in the national ranking and is now ranked 5th among the 27 regions of Ukraine. It has lost 3 places overall over the last three years. Its overall competitiveness index for 2013 has been reduced by 0.01 points to 4.15 points out of 7. This corresponds to 72th place out of 148 nations in the global ranking. In 2013 Dnipropetrovsk Oblast’s performance has deteriorated in half of the pillars of the ranking. The most significant drop is in the dimensions comprising basic requirements component of the ranking. Dnipropetrovsk Oblast has lost 4 places in the institutions pillar, mostly due to low assessment of protection of minority shareholders’ interests (down 10 places), and it has also lost 3 places in the health and primary education pillar due to low primary education enrolment (down 3 places). This overall drop Figure 5.5

reflects the progressive deterioration of the Oblast’s labour market efficiency and goods market efficiency (both  –  down 11 places). However at the same time the Oblast has improved its positions in 3 pillars: infrastructure (up 2 positions), higher education and training (up 1 position) and innovations (up 1 position). The Oblast receives an impressive assessment of extent of staff training (up by 11 positions) and business impact of rules on FDI (up by 6 positions). Dnipropetrovsk Oblast retains its strong positions in efficiency enhancers (3rd place) and innovation and sophistication factors sub-indices (3rd locally and 57th place globally). At the same time it has lost 2 positions and is now ranked 16th place in basic requirements sub-index. This poor performance hampers the Oblast’s competitiveness.

Dnipropetrovsk’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.15

Institutions

3.70

Infrastructure

4.11

Macroeconomic environment

4.20

Health and primary education

5.60

Higher education and training

4.88

Goods market efficiency

4.09

Labor market efficiency

4.61

Financial market development

4.19

Technological readiness

3.18

Market size

3.13

Business sophistication

4.13

Innovation

3.40 1

Dnipropetrovsk Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

17% of business executives are concerned with policy instability and 14% of executives single out tax regulations and corruption as the most problematic factors for their businesses. The same as last year, Dnipropetrovsk Oblast holds 2nd position in Ukraine by population and 3rd by share of Ukraine’s GDP. Dnipropetrovsk Oblast is the home for 7.3% of Ukrainian population and produces 11% of the country’s GDP. The gross regional product of the oblast per capita is 48% above Ukraine’s average (UAH 42,068).

CHAPTER 5. Ukrainian regions’ results

The strengths of Dnipropetrovsk Oblast include market size (2nd place), business sophistication (3rd place) and innovations (3rd place). The Oblast trails behind many other regions in health and primary education (26th place) and institutions (23rd place). For the third year in a row, Dnipropetrovsk Oblast ranks highly in the market size pillar. It retains its high position in domestic market size index (2nd place) and external market size index (3rd place) despite a slight decline in the exports as a percentage of GDP which results in a 1 place drop. Dnipropetrovsk Oblast can still be proud of its sophisticated businesses although the assessment has shown a weakening over the last few years. In 2013 the Oblast ranks 3rd out of 27 regions, down 1 position. The main reasons for this drop are the perceived deterioration in production process sophistication (down 10 places), local supplier quality (down 7 places), nature of competitive advantage (down 7 places), willingness to delegate authority (down 7 places) and reliance on professional management (down 7 places). At the same time Dnipropetrovsk Oblast leads the rankings in terms of local supplier quantity (2nd place), state of cluster development (2nd place) and extent of marketing (3rd place). In 2013 Dnipropetrovsk Oblast moves up one place to 3rd in the innovation pillar showing improvements in 5 out of 8 sub-pillars. The Oblast has gained two places in government procurement of advanced tech products and intellectual property protection. Also for this year the Oblast retains its leading positions in university-industry collabouration in R&D (2nd place), availability of scientists and engineers (3rd place) and PCT patents (4th place). In this latter sub-pillar the Oblast shows a reasonable good performance in the global ranking as it ranks 45th out of 148 nations. . Dnipropetrovsk Oblast trails behind many other regions in health and primary education, with a performance similar to that of last year. The Oblast has lost 3 positions this year, placing it 26th out of 27 regions of the Ukraine. It has also lost in 2013 4 positions in infant mortality (26th) and 3 positions in primary education enrolment (17th) and it has dropped to last position (27th) for HIV prevalence. However within 2013 the Oblast has climbed one place to 25th in tuberculosis incidence. Dnipropetrovsk Oblast does trail behind other regions in the institutions pillar. In 2013 it lost 4 places to take 23rd position in the national ranking. It can be seen that the Oblast’s sharpest drop is in such sub-pillars as public trust of politicians (down 12 places), protection of minor shareholders’ interests (down 10 places), efficiency of legal framework in challenging regulations (down 9 places) and diversion of public funds (down 5 places). The Oblast is close to the bottom of the national ranking in diversion of public funds (26th place), judicial independence (27th place) and irregular payments and bribes (25th place). However at the same time its private institutions receive very good assessment: ethical behavior of firms (2nd place) and efficacy of corporate boards (4th place). The latter is the Oblast’s most competitive advantage in the global rankings: it ranks 12th out of 148 nations. The three largest problematic factors for to doing business in the Oblast are the same as that for Ukraine in general. According to the Executive Opinion Survey,

CHAPTER 5. Ukrainian regions’ results

Donetsk

Rank 4

Надо сократить 1 строчку

Dynamics of Competitiveness Index, score

zzDonetsk Oblast retains its 4th position in the national ranking again

this year. It is behind Odessa Oblast yet ahead of Dnipropetrovsk Oblast. This fairly high position of the Oblast in the ranking is the result of its strong performance across the dimensions comprising innovation and sophistication factors: technological readiness, business sophistication and innovations

4.03

4.14

4.17

2012

2013

zzAmong the Oblast’s relative weaknesses are institutions, health

and primary education and goods market efficiency zzPolicy instability and tax regulations are singled out by executives

as the most problematic factors for doing business in the Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.78

4.20

5.66

4.67

4.11

4.61

4.21

3.39

3.02

4.25

3.44

2012

3.79

4.10

4.52

5.65

4.49

3.96

4.77

4.14

3.34

2.75

4.18

3.34

2011

3.75

4.11

4.04

5.59

4.47

3.80

4.79

4.06

3.25

2.66

4.10

3.23

In 2013 Donetsk Oblast, was overtaken by Odessa Oblast, but remains in 4th position as it overtook Dnipropetrovsk Oblast. Over the last two years the aggregate competitiveness index of Donetsk Oblast has increased by 0.14 points to 4.17 which is better than Ukraine’s performance in the global ranking. The aggregate competitiveness index of Donetsk Oblast corresponds to 72nd place in the global ranking among 148 nations. The region performs better than Georgia, Croatia and Romania but it scores lower than Vietnam, Columbia, Montenegro and Russia. It shows the best performance in the innovation and sophistication factors pillars: ranking 52nd globally, performing better than many CIS countries. Donetsk Oblast has improved its scores in 9 out of 12 pillars of competitiveness since last year. The Oblast Figure 5.6

features a notable improvement in the market size pillar (a gain of 0.27 points) due to the increase in the domestic market size index. At the same time it drops significantly in the labour market efficiency pillar (a loss of 0.16 points). However, it is still one of the Oblast’s competitive advantages if compared with the 148 nations in the global ranking. Other strengths of the Donetsk Oblast include higher education and training, business sophistication and innovations. In the latter two pillars the Donetsk region is ahead of the City of Kiev and most Ukrainian regions. Weak institutions, poor health and primary education and goods market efficiency do not contribute to intensifying competitiveness in the region and Donetsk Oblast is near the bottom of the rankings in all the aforementioned pillars. The Oblast’s most notable strength in the national ranking relates to technological readiness (3rd place) but

Donetsk’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.17

Institutions

3.78

Infrastructure

4.20

Macroeconomic environment

4.20

Health and primary education

5.66

Higher education and training

4.67

Goods market efficiency

4.11

Labor market efficiency

4.61

Financial market development

4.21

Technological readiness

3.39

Market size

3.02

Business sophistication

4.25

Innovation

3.44 1

Donetsk Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

in the sub-pillars in respect to government efficiency, even in the global ranking. The Oblast ranks 26th globally in wastefulness of government spending and transparency of government policymaking. Due to the high concentration of large and highly efficient businesses Donetsk Oblast can boast high efficiency of corporate boards. The region shows better performance than Switzerland, Canada and the USA, placing it 11th amongst the 148 nations. Donetsk Oblast is ranked 14th in the national ranking for goods market efficiency due to high extent of market dominance (27th place) and low effectiveness of anti-monopoly policy (20th place). As a result business executives are much concerned with high tax rates and lack of incentives for investment. Low prevalence of foreign ownership also hampers investment in this region. Donetsk businessmen believe that the most problematic factors for doing business in the region include policy instability (15.5%) and tax regulations (15.3%), which are followed by inefficient government bureaucracy including the permit and licensing system for doing business (11.6%). They are less concerned with corruption (9.8% against Ukraine’s average of 11.3%).The same situation occurs with access to land plots and inadequate supply of infrastructure. At the same time, access to financing, inflation and foreign currency regulations are of less importance compared with other regions of Ukraine. Donetsk Oblast ranks 1st among 27 regions of Ukraine by population (9.6%) and 2nd by share in Ukraine GDP (12.4%). The gross regional product of the oblast per capita is UAH 36,446 or 127.9% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

this does not ensure any competitive advantages for the Oblast in the global ranking. Donetsk Oblast ranks 87th among the 148 nations: it is positioned near Columbia and Kenya. The region shows the highest level of technological adoption amongst the Ukrainian regions. This refers to both availability of latest technologies and firm-level technology absorption. In the latter pillar the Oblast is quite competitive at the global level (68th place), the same as in mobile telephone subscriptions (41st place). Donetsk Oblast falls far behind other countries in the availability of latest technologies (111th place) and FDI and technology transfer (106th place), which proves the extensive nature of FDI in the Oblast. The Oblast shows better performance in bringing new technologies into the region: it ranks 2nd behind the Kharkiv Oblast in the national ranking and ranks 52nd in the global ranking (at the same level of Azerbaijan and Turkey and ahead of Poland, Russia and Slovakia). The Oblast improves its performance across all the sub-pillars of innovations: it receives relatively good scores for its capacity for innovation (34th place globally), quality of scientific research institutions (42nd place) and the level of company spending on R&D (53rd place). At the same time intellectual property protection remains a problematic factor for Donetsk Oblast (88th place globally) as well as for other Ukrainian regions. For the second year in a row, the Oblast leads the national ranking in business sophistication. The Oblast shows good performance in the global ranking as well, at 53rd position globally, at the same level as Estonia, Chile and Mexico, as an example, Poland ranks 65th and Russia is at 107th. Business executives give high assessment of state of cluster development, extent of marketing and local supplier quantity and quality. The Oblast ranks 6th globally in the first pillar, however, in the latter pillar it ranks only 77th. This means that there are enough suppliers in the region but the quality of their work is far below the world-class standards. One more problematic factor is the production process sophistication (96th place globally). However, there is hardly any region in Ukraine which performs well in this indicator. The largest weakness of the Donetsk Oblast is health and primary education (19th place among 27 regions of the Ukraine), which corresponds to 76th place in the global ranking, at the same level as Mongolia but behind Russia yet ahead of Armenia, Kazakhstan and Moldova. The greatest area of weakness refers to healthcare: tuberculosis incidence and business impact of tuberculosis, HIV prevalence, infant mortality and life expectancy. Donetsk Oblast is amongst the bottom three regions in the last three aforementioned pillars. The Oblast ranks 136th out of 148 nations in HIV prevalence. Poor institutions in the Oblast (17th place nationally and 79th place globally) contribute to non-competitiveness in the region. Other big challenges faced by the Oblast include judicial independence and efficiency of legal framework in settling disputes (both at the level of 118th place globally). The situation with judicial independence is getting worse every year, according to the opinion of business executives over the last three years. The Oblast provides much poorer protection of the minority shareholders’ interests and thus it has dropped to 129th place globally. However, Donetsk Oblast does show good performances

CHAPTER 5. Ukrainian regions’ results

Ivano-Frankivsk

Rank 15

Dynamics of Competitiveness Index, score

zzThe Oblast is among the leaders in labour market efficiency,

health and primary education zzThe oblast has failed to improve in infrastructure, higher education

3.93

3.98

2012

2013

3.78

and training as well as in financial market development zzPolicy instability is the No.1 issue for local businessmen, followed

by corruption and tax regulations

2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.79

3.57

4.20

5.91

4.37

4.09

4.73

4.09

3.09

2.09

4.02

3.14

2012

3.75

3.47

4.52

5.88

4.35

3.91

4.78

4.00

2.91

2.01

3.82

2.99

2011

3.65

3.53

4.03

5.78

4.33

3.71

4.83

3.84

2.73

1.64

3.63

2.92

Over the past year, Ivano-Frankivsk has managed to migrate from being an outsider to becoming an average performer, climbing from 21st position to 15th. Its overall competitiveness index is 3.98, a little above the last year’s value of 3.93. This corresponds to 88th place in the GCI – slightly below Bosnia and Herzegovina (4.02) and a little above Moldova (3.94). The Oblast has improved its positions in the national ranking year on year, while Ukraine has fallen in the Global Competitiveness Index. Compared with 2012, Ivano-Frankivsk has received better scores for all pillar except labour market efficiency (down 0.06), which saw a deterioration the year before as well. Nonetheless, labour market efficiency as well as health and primary education are competitive strengths of the Oblast as benchmarked against countries in the GCI. On the other hand, some pillars where the Oblast has Figure 5.7

strengthened its footing still remain its weakest areas. They include goods market efficiency (up 0.18), technological readiness (up 0.18), infrastructure (up 0.1) and market size (up 0.08) where the Oblast could be ranked at the level of 100th place globally or even lower in some cases. The competitive advantages of the Oblast are health and primary education (5.91) as well as business sophistication (4.02) and innovation (3.14). In Ukraine, the Oblast ranks 5th, 7th and 7th respectively on these pillars. However at the same time, Ivano-Frankivsk ranks low on infrastructure (23rd) and financial market development (20th). Moreover, institutions (15th), higher education and training (19th), goods market efficiency (16th) and market size (12th) impede the Oblast’s competitive growth. The Oblast is a top performer in health and primary education, ranking 5th this year and 6th last year. Such

Ivano-Frankivsk’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.98

Institutions

3.79

Infrastructure

3.57

Macroeconomic environment

4.20

Health and primary education

5.91

Higher education and training

4.37

Goods market efficiency

4.09

Labor market efficiency

4.73

Financial market development

4.09

Technological readiness

3.09

Market size

2.09

Business sophistication

4.02

Innovation

3.14 1

Ivano-Frankivsk Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

scores for the state of cluster development (4.40, up 0.18), capacity for innovation (4.11, up 0.76), availability of scientists and engineers (3.99, up 0.33) and retained position in the quality of scientific research institutions (4.0). Business executives regard policy instability as the most problematic factor for doing business, similarly to the average perception across the country. Nevertheless, this issue is more critical for local businessmen (referred to by 18.7% ) than for their Ukrainian peers on average (16.9%). Corruption (12.3%) and tax regulations (11.3%) are also in top three barriers, while other factors do not receive even 10%. Such factors as inadequately educated workforce (2.4%) and restrictive labour regulations (4.2%) are of less priority, thus helping labour market efficiency to stay among Oblast’s competitive advantages.

CHAPTER 5. Ukrainian regions’ results

strong results come from low infant mortality, high primary education enrollment rate and good quality of primary education (4.18, comparable with Poland at 58th and above Bulgaria at 60th and Russia at 61st). Infant mortality is at the level of the indicator in Slovakia and Montenegro and life expectancy, at the level of Georgia. Tuberculosis and HIV/AIDS incidence in the Oblast is similar to Ukraine’s average score, while business impact of these diseases is ranked at the level of the bottom half of the GCI – 4.7 scores (similar to India at 103rd, but worse than in Moldova, but better than in Kyrgyzstan and Kazakhstan) and 5.41 (similar to Kazakhstan at 76th). Ivano-Frankivsk does not perform well in other pillars of the basic requirements sub-index. Despite a slight improvement in institutions (up one place to 15th, up 0.04) and infrastructure (23rd, the same as last year, up 0.1), many indicators within these pillars receive low assessment or even continue to deteriorate. In the institutions pillar, such indicators relate to both public and private institutions and include judicial independence (2.81, corresponding to 114th position same as Romania), ethical behavior of firms (3.36, a little above 125th place of Slovakia), intellectual property protection (3.23, matching nearly 100th place globally) and protection of minority shareholders’ interests (3.15, similar to 135th place). In global comparison, this is performance of an underdeveloped nation. Infrastructure sees a decline across a number of dimensions such as the quality of roads (2.82, similar to Kazakhstan at 117th and Serbia at 119th, but above Ukraine’s global performance ranked at 144th), quality of port infrastructure (evaluated through access to ports in other Oblasts, 1.86, a little above Bosnia and Herzegovina at 147th and Kyrgyzstan at the bottom), quality of air transport infrastructure (3.85, a little bit below Russia at 102nd). Ivano-Frankivsk is among leaders in Ukraine by the labour market efficiency, ranking 4th nationally (its best position) and 30th globally (Azerbaijan). The strong footing is down to excellent performance in hiring and firing practices and redundancy costs, where the Oblast takes 1st place in Ukraine. At the same time, the Oblast ranking has been falling on this pillar for two consecutive years, losing 0.05 scores annually. Therefore, the Oblast is known for labour migration to other Ukrainian Oblasts or countries and thus its losing ground in the labour force efficiency. Ivano-Frankivsk has been second to last in the Ukraine brain drain for two years running. The Oblast takes middle and low places on other pillars of the efficiency enhancers sub-index: technological readiness (11th), market size (12th), goods market efficiency (16th), higher education and training (19th) and financial market development (20th). The Oblast performs extremely poorly in the areas influencing investment activity: extent and effect of taxation (3.19 points), business impact of rules on FDI (3.87), venture capital availability (2.01) and soundness of banks (4.44). Moreover, in these indicators Oblast ranks low both nationally and globally, corresponding to 114th position (Lithuania), 116th (Romania), 128th (between Slovenia at 127th and Serbia at 129th) and 100th (Kazakhstan). Ivano-Frankivsk ranks highly in the innovation and sophistication factors sub-index in general (6th) and its pillars in particular (6th on business sophistication and 6th on innovation). Over the year, the Oblast has improved

Ivano-Frankivsk Oblast ranks 13th by population (3.0%) and 15th by share in the country’s GDP (2.1%). The gross regional product is UAH 19,386 or 68% of the national average.

CHAPTER 5. Ukrainian regions’ results

Kharkiv

Rank 2

Dynamics of Competitiveness Index, score

zzKharkiv maintains its 2nd place in the Ukrainian National

Competitiveness Report, with only Ukraine’s capital ahead. The high place is a result of high scores in all sub-indices zzThe Oblast tops the innovation and sophistication factors sub-

4.19

4.25

2012

2013

4.05

index and the higher education and training pillar as well as ranks among the top 3 or top 5 in the national index on other pillars, except for health and primary education (15th) and goods market efficiency (9th) which are the relative problematic areas zzLocal businesses believe that policy instability is the most problematic

factor for business along with tax regulations and corruption 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.77

4.46

4.20

5.73

5.28

4.17

4.73

4.22

3.33

2.75

4.21

3.60

2012

3.53

4.34

4.52

5.78

5.10

3.94

4.78

4.04

3.43

2.69

4.06

3.44

2011

3.45

4.22

4.10

5.80

4.95

3.76

4.75

3.92

3.24

2.53

3.96

3.27

Kharkiv remains one of the most successful Oblasts in the Ukraine as it has kept 2nd position in the national report (3rd in 2011). Kharkiv continues to earn high scores; its competitiveness index in 2013 has grown 0.06 scores (0.14 in 2012 and 0.01 in 2011). This year the Oblast’s aggregate score is 4.25 points that corresponds to 62nd-64th position in the GCI taken by Slovenia, Hungary and Russia respectively. The Oblast shows average scores for the first two sub-indices: 4.54 for basic requirements, slightly lower 70th place (Macedonia) and 4.08 for efficiency enhancers, between Croatia and Greece (68th and 67th) and Azerbaijan (66th). But in the innovation and sophistication factors sub-index, Kharkiv is at the same level as Turkey (47th). Since it is in the top 50 of the global index, we can say that many indicators of the sub-index belong to competitive advantages of the Oblast. Figure 5.8

Compared with 2012, the Oblast performs better in business sophistication (up to 2nd), financial market development (up to 4th), labour market efficiency (up to 3rd), goods market efficiency (up to 9th) and institutions, which is the most problematic area for the Oblast (20th in 2013 up from 25th in 2012, which was the lowest position of the Oblast across all dimensions of the competitiveness index). Kharkiv’s position in higher education and training and innovation has not changed, and the Oblast still tops both pillars in the national ranking. However, the Oblast deteriorates in infrastructure (4th), technological readiness (4th), market size (5th) as well as in health and primary education (15th). The biggest increase in scores has been for institutions and goods market efficiency (both improved by 0.23 points), higher education and training (both up by 0.18) and for both

Kharkiv’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.25

Institutions

3.77

Infrastructure

4.46

Macroeconomic environment

4.20

Health and primary education

5.73

Higher education and training

5.28

Goods market efficiency

4.17

Labor market efficiency

4.73

Financial market development

4.22

Technological readiness

3.33

Market size

2.75

Business sophistication

4.21

Innovation

3.60 1

Kharkiv Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

We should highlight, however, the areas where the Oblast can be regarded a top performer from the international perspective. They come mostly from four pillars of the competitiveness index and determine competitive advantages of the Oblast. Firstly, these are indicators of innovation: capacity for innovation (4.13, between Iceland at 32nd and Azerbaijan at 35th in the global index), company spending on R&D (3.26, at the level of Azerbaijan ranking 56th), university-industry collaboration in R&D (3.95, between Spain at 48th and Thailand at 51st, quality of scientific research institutions (4.83, like Lithuania at 32nd) and availability of scientists and engineers (4.62, similar to Hong Kong at 32nd and South Korea at 33rd). The following business sophistication indicators (the second pillar of the innovation and sophistication factors sub-index) receive high assessment: local supplier quantity (5.04, approximately between Poland (32nd), Lithuania (35th) and Portugal (37th)), state of cluster development (4.16, the same as Portugal in 41st position), value chain breadth (4.17, similar to Lithuania (37th) and Iceland (38th)) and control of international distribution (4.77, at the level of Taiwan at 21st). Kharkiv’s scores for a number of indicators in the labour market efficiency pillar make the Oblast comparable with the Asian Tigers: cooperation in labor-employer relations (5.08 like Taiwan at 25th, flexibility of wage determination (5.48, similar to Taiwan (31st), Turkey (32nd) and Malaysia (33rd)) and hiring and firing practices (4.45, similar to Malaysia in 26th position). Finally, higher education and training is the absolute competitive advantage of the Oblast, where it scores well for the quality of the educational system (4.55, similar to Taiwan at 30th), quality of maths and science education (4.50, at the same level as Luxemburg 44th position), Internet access in schools (4.96, similar to Ireland in 43rd position) and availability of research and training services (5.51, at the same level as Norway at 13th). Kharkiv’s companies have pointed out that the largest barriers for doing business include policy instability, ranking first in the list with a huge gap between others. This is a problematic issue on average across the whole of the country, however Kharkiv assign a very high priority to it (21.2% of respondents mentioned it against 16.9% of Ukrainian businessmen on average). Last year the factor had a much lower value, hardly showing any difference from Ukraine’s average perception (15.6% against 15.2%). Business executives called corruption (11.4%), tax regulations (14.8%) and inefficient government bureaucracy (9.8%) as other important and problematic factors. The responses here do not differ much from the average scores across other Oblasts. Kharkiv Oblast ranks 4th among 27 regions of Ukraine both by population (6%) and by share in Ukraine’s GDP (5.9%). The gross regional product per capita is UAH 27,966 or 98.2% of the country’s average.

CHAPTER 5. Ukrainian regions’ results

pillars of innovation and sophistication factors: business sophistication (up by 0.15) and innovation (up 0.16) as well as for infrastructure (up by 0.12) although the Oblast loses one place on the pillar. The biggest drop is in technological readiness (down 0.1), health and primary education and labour market efficiency (both down by 0.05). Kharkiv is among the top performers in the Ukraine, however its scores across a number of competitiveness dimensions are among the lowest in the world. This can be seen within the indicators in the institutions, the most problematic pillar of the Oblast in the national ranking. These include public trust of politicians (2.39, corresponds to the position between 97th of Bulgaria, 99th of Albania and 100th of Poland), burden of government regulation (3.10, similar to 105th place of Bulgaria in the global index), efficiency of legal framework in settling disputes (3.12, corresponds to 113th spot of Hungary), efficiency of legal framework in challenging regulations (3.03, corresponds to 105th place of Georgia) and organized crime (4.50, similar to 102nd of the Slovak Republic), where the Oblast has improved by 0.32 points.. The institutions pillar also reveals problematic indicators related to private institutions, firstly, strength of auditing and reporting standards (3.72 that corresponds approximately to position between 128th of El Salvador and 131st of Bolivia) and protection of minority shareholders’ interests (3.50, between 118th of Moldova and 121st of the Kyrgyz Rep.). Problematic indicators related to investment activity should be highlighted too. The Oblast receives low scores for the extent and effect of taxation (3.19, at the level of the 114th place taken by Lithuania) as well as business impact of rules on FDI (4.21, similar to 102nd position taken by Hungary). The score for the effectiveness of antimonopoly policy is low as well – 3.39, corresponding to the 125th position taken by Albania. This also reduces the investment appeal of the Oblast. The prevalence of foreign ownership is therefore also low (3.29, approximately the same as Algeria at 135th, but lower than in Russia at 132nd). The situation comes from changes in the FDI; Kharkiv showed the biggest outflow of foreign investment among all regions in Ukraine in 2012. In addition the investments in Kharkov are still working insufficiently enough to encourage technology and innovation, i.e. to develop competitive advantages of the Oblast. The Oblast receives low scores for FDI and technology transfer (3.78 that corresponds to the position between 124th of Iceland and 125th of Russia) and venture capital availability (2.17, approximately at the same level as 110th position taken by Croatia). The market size assessment is not high either, with the domestic market size index at the level of 110th place globally and the foreign market size index, at 127th (same as Armenia). The scores for infrastructure reveal controversies. Although Kharkiv performs well in the quality of railroad infrastructure (5.51, corresponds to 11th ranking, the same as Netherlands), it considerably lags behind in the quality of port infrastructure as evaluated via access to the ports in other Oblasts (2.62, similarly to Moldova at 138th and Serbia at 139th which do not have access to sea either). The quality of air transport infrastructure is good (5.13, at the level of 48th position occupied by Azerbaijan), but performance in the available seat kilometers is among the worst in the world.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

Kherson

Rank 26

Dynamics of Competitiveness Index, score

zzKherson Oblast has relative advantages in business sophistication,

infrastructure, institutions, higher education and training. zzThe Oblast lags behind in labour and goods market efficiency,

financial market development and market size. zzPolicy instability, inefficient government bureaucracy and tax

3.82

3.87

2012

2013

3.58

regulations are the most problematic factors for doing business in the Oblast.

2011

Evaluation of dynamics of regionâ&#x20AC;&#x2122;s results by 12 pillars of Competitiveness, score

2013

3.77

3.66

4.20

5.65

4.37

4.01

4.42

4.01

2.99

1.70

3.97

2.90

2012

3.69

3.59

4.52

5.64

4.20

3.79

4.56

3.79

2.95

1.64

3.73

2.86

2011

3.53

3.57

3.71

5.60

4.08

3.51

4.63

3.43

2.62

1.46

3.39

2.59

In 2013, Kherson succeeded in gaining 1 place among Ukrainian regions to take 2nd to last place (26th with a score of 3.87) in Ukrainian National Competitiveness Report that corresponds to 96th position in the global ranking. The result is comparable with Kenya (3.85), Albania (3.85) and Greece (3.93), but below the CIS countries. Compared with 2012, Kherson has climbed 7 places in innovation and sophistication factors (17th), at the level of Greece (3.46) and 1 place in efficiency enhancers (26th). The position in basic requirements remains the same (25th), at the same level as Romania (4.32) and Greece (4.30). This year Kherson improves in 6 pillars: business sophistication (12th, up 13 places), higher education and training (18th, up 4 places), institutions (19th, up 2 places), financial market development (25th, up 2 places) Figure 5.9

as well as health and primary education (20th, up 1 place). At the same time, it falls 1 place on technological readiness (20th) and on innovation (22nd). This year Kherson has made considerable progress in business sophistication (12th compared to 25th in 2012) where its score (3.97) is at the same level as Azerbaijan (3.97) and Slovak Republic (3.95). This strong performance comes from good results in control of international distribution (2nd), value chain breadth (7th), state of cluster development (9th) and the local supplier quality (9th), although the Oblast ranks only 20th by local supplier quantity. Over the past few years, however, the Oblast has not improved much in the extent of marketing (24th) and reliance on professional management (23rd). Kherson strengthens its footing in higher education and training, climbing to 18th place from 23rd in the

Khersonâ&#x20AC;&#x2122;s perfomance by 12 pillars of competitiveness Competitiveness Index

3.87

Institutions

3.77

Infrastructure

3.66

Macroeconomic environment

4.20

Health and primary education

5.65

Higher education and training

4.37

Goods market efficiency

4.01

Labor market efficiency

4.42

Financial market development

4.01

Technological readiness

2.99

Market size

1.70

Business sophistication

3.97

Innovation

2.90 1

Kherson Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

In contrast to their peers in other Oblasts, Kherson’s top managers are more concerned with inadequate supply of infrastructure and restrictive labour regulations. At the same time, foreign currency regulations and inadequately educated workforce are less of a priority than on average in Ukraine. Kherson Oblast ranks 21st by population (2.4%) and 22nd by share in Ukraine’s GDP (1.4%). The gross regional product per capita is UAH 16,990 or 59.6% of the country’s average.

CHAPTER 5. Ukrainian regions’ results

national competitiveness report, with better scores for the quality of math and science education (7th), Internet access in schools (11th), extent of staff training (15th) and availability of research and training services (15th). Yet the scores for the quality of the educational system and tertiary education enrollment rate (24th and 21st respectively) are low and correspond to 62th and 58th positions in the global index respectively. For the second consecutive year Kherson receives reasonable places on infrastructure (19th in Ukraine and 85th globally) resulting from a strong performance in mobile telephone subscriptions (6th), which is counted in two pillars, and a relative advantage in terms of the quality of port infrastructure (5th). Nevertheless, Kherson has poor quality of overall infrastructure (23rd) and quality of air transport infrastructure (21st). Compared with other Oblasts, the Oblast also performs poorly in terms of the quality of railroad infrastructure (27th) and electricity supply (26th). In 2013, Kherson see a better situation with institutions (19th with 3.77 points), which is at the 80th place globally. The improvement can be attributed to higher scores for transparency of government policymaking (9th, up 6 places), efficiency of legal framework in challenging regulations (10th, up 7 places) and wastefulness of government spending (8th, up 4 places). At the same time, the development is constrained by high burden of government regulation and poor ethical behavior of firms, where the Oblast ranks 26th in Ukraine and 120th and 125th in the global index respectively. For 3 years running Kherson has been ranked poorly by the labour market efficiency (57th globally) because of low results for such indicators as women in labour force (27th nationally and 88th globally ), capacity to retain talent (27th and 132nd), flexibility of wage determination (24th) and pay and productivity (24th). Local businesses, however, speak of a slight improvement in cooperation of labour-employer relations (19th compared with 22nd in 2012) and reliance on professional management (23rd compared with 26th in 2012). In 2013, Kherson ranks 2nd to last for goods market efficiency, the performance corresponding to 104th position in the GCI. The Oblast delivers especially poor results in imports as a percentage of GDP (27th), intensity of local competition (24th), effectiveness of anti-monopoly policy (22nd nationally and 133rd globally) and agricultural policy costs (20th and 121st). At the same time, local businessmen mention progress of the Oblast to decrease the extent of market dominance (4th, up 14 places) and boost the degree of customer orientation (14th, up 12 places). Although Kherson has slightly improved its standing in the financial market development, it still ranks low, taking 25th place in Ukraine and 70th in the world. The absolute value of the indicator has increased by 0.21 points or 2 places over the year. The Oblast has problems with soundness of banks (24th), financing through local equity market (25th), ease of access to loans (22nd) and regulation of securities exchanges (23rd). However, the affordability of financial services (10th, up 8 positions) has risen. . The most problematic factors for doing business in the Oblast have not changed since last year: policy instability (17.7%), tax regulations (13.5%) and tax rates (12.7%).

CHAPTER 5. Ukrainian regions’ results

Khmelnytskiy

Rank 13

Dynamics of Competitiveness Index, score

zzSince 2012 Khmelnytsky has shown strong progress to climb to

the 13th position in the national report. The Oblast receives high scores for institutions, labour and goods markets efficiency

3.98

3.92

zzThe region trails most Oblasts in infrastructure, innovation and

3.77

market size zzPolicy instability, tax regulations and tax rates are the most

problematic factors for doing business in the region 2011

2012

2013

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

4.00

3.52

4.20

5.86

4.42

4.24

4.80

4.19

2.99

1.94

3.93

2.93

2012

3.92

3.35

4.52

5.83

4.34

3.96

4.86

4.01

2.89

1.82

3.83

2.78

2011

3.90

3.42

3.87

5.83

4.29

3.73

4.81

3.84

2.67

1.57

3.74

2.78

Khmelnytsky has greatly improved in the Ukrainian National Competitiveness Report 2013 and has achieved 13th place comparing to 22nd place in 2012. The Oblast’s aggregate score increased by 0.06 points (from 3.92 to 3.98) however it is still lower than the national average and Ukraine’s score in the Global Competitiveness Index. Khmelnytsky’s index corresponds to the 90th position globally, at the same level as Slovakia and Greece. Since last year the Oblast has improved in all three sub-indices, with the highest achievements in efficiency enhancers, the most important for Ukraine’s development stage sub-index. It accounts for 50% of the aggregate competitiveness score. Khmelnytsky shows considerable progress in the sub-index as it has added six positions to achieve 11th place in 2013. In two other subindices, the basic requirements and innovation and sophistication factors, the Oblast ranks 19th and 18th respectively. Figure 5.10

Khmelnytsky has shown a steady increase in its scores in 10 out of 12 pillars year on year except for labour market efficiency. The most impressive increase is seen in institutions (1st, up 6 positions), goods market efficiency (2nd, up 8 positions), financial market development (7th, up 5 positions), technological readiness (16th, up 6 positions) and innovation (19th, up 5 positions). This improvement has helped the Oblast to leave the list of outsiders (22nd in 2012) to become near the top ten Oblasts in the Ukraine. However at the same time, the Oblast is not performing well in the national ranking for infrastructure (24th), innovation (19th) and market size (17th). Khmelnytsky leads the ranking in 2013 for institutions (1st) which corresponds to 64th position globally, at the same level as Poland, Lithuania and Azerbaijan. This

Khmelnytskiy’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.98

Institutions

4.00

Infrastructure

3.52

Macroeconomic environment

4.20

Health and primary education

5.86

Higher education and training

4.42

Goods market efficiency

4.24

Labor market efficiency

4.80

Financial market development

4.19

Technological readiness

2.99

Market size

1.94

Business sophistication

3.93

Innovation

2.93 1

Khmelnytskiy Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

policy are less pressing issues compared with the average opinion in Ukraine. Khmelnytsky Oblast ranks 14th among 27 regions of Ukraine by population (2.9%) and 17th by share in Ukraine’s GDP (1.8%). The gross regional product per capita is UAH 17,260 or 60.6% of the country’s average.

CHAPTER 5. Ukrainian regions’ results

strong result comes from good scores for property rights (2nd nationally and 48th globally), burden of government regulation (2nd and 58th) and transparency of government policymaking (1st and 15th globally). Although the Oblast is at the top for some indicators of the pillar, its performance is at the level of outsiders in the international perspective. For instance, the Oblast ranks 96th globally in terms of protection of minority shareholders’ interests. Local businesses give the lowest scores to public trust of politicians (20th in nationally and 94th globally). Executives believe that the labour market efficiency is one of the biggest strengths of Khmelnytsky, putting the region first on this pillar (compared with being in 3rd position last year). This result equates to being in 24th place globally, at the same level as Japan, Luxembourg and the Netherlands. Senior managers of the Oblast assess highly cooperation in labour-employer relations (3rd nationally and 27th globally), pay and productivity (1st and 2nd) and reliance on professional management (2nd and 54th). Thus the Oblast has a competitive advantage in the pillar both in the national and global rankings. Khmelnytsky has shown the largest improvement in goods market efficiency (moving up from 10th to 2nd place in 2013), with the most impressive growth seen is in intensity of local competition (up 13 places, 84th globally), prevalence of foreign ownership (up 6 places, 141st globally) and buyer sophistication (up 17 places, 34th globally). The Oblast has given solid performances in the extent of market dominance (3rd in Ukraine, 34th globally) and degree of customer orientation (4th and 34th). However, despite these positive results in the national report, the Oblast is far behind other countries in terms of effectiveness of anti-monopoly policy, prevalence of trade barriers, business impact of rules on FDI and imports as a percentage of GDP. Khmelnytsky is outside top 100 in all these indicators in the GCI. Khmelnytsky’s infrastructure (24th nationally and 90th globally) still has the worst score although it has risen two places year on year. Business executives have given a poor assessment for the quality of roads (16th), quality of air transport infrastructure (19th) and the number of fixed telephone lines (17th nationally and 63rd globally). The Oblast trails other regions in mobile telephone subscriptions (27th nationally). However at the same time, top managers speak positively about the quality of railroad infrastructure (2nd) and the quality of overall infrastructure (7th). Innovation (19th, up 5 places from 2012) is an important pillar that pulls the region down in the competitiveness index. Despite some positive signs, the Oblast’s scores for several indicators are one of the lowest in the country: PCT patent applications (26th nationally and 99th globally), availability of scientists and engineers (22nd and 130th) and government procurement of advanced technology products (25th and 124th). Similarly to the average assessment in Ukraine Khmelnytsky senior executives consider policy instability (18.6%) as the largest obstacle for business, followed by tax regulations (15.1%) and tax rates (11.8%). The latter assessment is in contrast to the average result across Ukraine. Local businesses are more concerned with access to financing, inflation and foreign currency regulations. At the same time, inefficient government bureaucracy, local and national government instability and regional customs

CHAPTER 5. Ukrainian regions’ results

Kirovohrad

Rank 27

Dynamics of Competitiveness Index, score

zzKirovohrad performs well only in institutions with an average

scores for innovation zzThe Oblast trails all other Oblasts in health and primary education,

higher education and training as well as taking the second to last position in financial market development and technological readiness

3,84

3,83

2012

2013

3,68

zzTax regulations, tax rates, corruption, policy instability and

inefficient government bureaucracy are the five most problematic factors for doing business in the Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.94

3.50

4.20

5.52

4.08

4.05

4.53

4.01

2.85

1.80

3.87

2.94

2012

3.94

3.41

4.52

5.54

4.10

3.89

4.79

3.84

2.84

1.67

3.92

2.94

2011

3.71

3.33

4.04

5.55

4.06

3.67

4.76

3.74

2.62

1.45

3.82

2.74

This year Kirovohrad was placed last in 27th place in the national ranking with a slight drop of the index by 0.01 point to 3.83. The Oblast has been ranked second to last for the past two years. Scores for Kirovohrad correspond to the 100th place in the global index – the same level of small nations in Central America, e.g. Nicaragua (99th) and El Salvador (97th), whilst the former socialist country of Albania is 95th and Serbia is 101st. Only Kyrgyzstan (121st) performs worse amongst the post-Soviet nations. The Oblast performs relatively better in the sub-index of innovation and sophistication factors (22nd in Ukraine), with a low score of 3.40 matching 90th position in the world. The Oblast takes the lowest place in efficiency enhancers and second to last (26th, followed by Zhytomyr) in basic requirements. Figure 5.11

In terms of individual pillars, Kirovohrad has improved on technological readiness (up 0.01), infrastructure (up 0.09), market size (up 0.13), goods market efficiency (up 0.17) and financial market development (up 0.17). Aggregate scores for innovation and institutions have not changed (except for a downturn in the evaluation of public institutions (down 0.02) and a small upturn in private institutions (up 0.07). At the same time, the Oblast performs worse in health and primary education (down 0.02 points in total as the score for health gained 0.05 but assessment of primary education lost 0.09), higher education and training (down 0.02), business sophistication (down 0.05) and labour market efficiency (down 0.26). Kirovohrad’s values in many indicators are both low in the national and international comparison. For example, the scores for infrastructure correspond to the 91st place

Kirovohrad’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.83

Institutions

3.94

Infrastructure

3.50

Macroeconomic environment

4.20

Health and primary education

5.52

Higher education and training

4.08

Goods market efficiency

4.05

Labor market efficiency

4.53

Financial market development

4.01

Technological readiness

2.85

Market size

1.80

Business sophistication

3.87

Innovation

2.94 1

Kirovohrad Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Kirovohrad Oblast ranks 25th among 27 regions of Ukraine by population (2.2%) and 20th by share in Ukraine’s GDP (1.5%). The gross regional product per capita is UAH 19,918 or almost 70% of the Ukrainian average.

CHAPTER 5. Ukrainian regions’ results

globally and for goods market efficiency, at 98th (largely because of deterioration in the external competition subpillar including prevalence of foreign ownership and imports as a percentage of GDP, where the Oblast ranks the lowest in the world (148th)). In technological readiness, the Oblast performs at the level of 119th place in the GCI, particularly because of the poor rate of FDI and technology transfer which corresponds to 145th place. The Oblast has extremely low scores by global standards for the market size matching the 143rd position taken by Bhutan. The domestic market size index corresponds also to the 143rd position and the foreign market size index, at 146th place (Cape Verde). Innovation is another pillar where Kirovohrad performs poorly (corresponds to 106th place in the global ranking at the same level as Morocco). In particular, the Oblast runs 138th (Bhutan) on availability of scientists and engineers. In some indicators, however, the Oblast performs on the top level in global comparison. For example, the Oblast’s scores for business costs of terrorism (6.62) which corresponds to 6th place in the world (obviously, the Oblast ranks 1st in Ukraine too). In terms of pay and productivity, the Oblast receives 5.07, which corresponds to the 7th position in the global index (same as UAE). Despite its last place in Ukraine, Kirovohrad is among the leaders in a number of indicators, firstly, in the institutions pillar: public trust of politicians (1st), irregular payments and bribes (2nd), property rights (3rd), efficiency of legal framework in challenging regulations (3rd), efficacy of corporate boards (5th) and organized crime (6th). The Oblast shows strong results in some indicators of the goods market efficiency, including burden of customs procedures (2nd), effectiveness of anti-monopoly policy (4th), intensity of local competition (6th) and buyer sophistication (8th). Local supplier quality (4th in Ukraine but ranked 80th globally, the same as Macedonia) is the area with fair performance in the business sophistication pillar. At the same time, the Oblast trails others in the national competitiveness ranking across many dimensions. In fact, they are the major contributors to the Oblast’s lowest rank this year. These indicators can be figuratively divided into two groups. The first includes humanitiesrelated indicators, e.g. life expectancy, quality of primary education, quality of the educational system, Internet access in schools and tertiary education enrollment rate (26th). The second group includes investment and financial indicators: prevalence of foreign ownership, soundness of banks, financing through local equity market and FDI and technology transfer (26th). Local businessmen mention tax-related (tax regulations (13.9%) and tax rates (11.2%)) and inefficient government issues (corruption (11.6%), inefficient government bureaucracy (11.2%), local and national government instability (9.3%) and policy instability (12.0%) as the largest hurdles for doing business in Kirovohrad. At the same time, senior managers are not so much concerned with a number of factors where the Oblast scores well, e.g. crime and theft (1.0%), regional customs policy (1.0%) and restrictive labour regulations (1.5%).

CHAPTER 5. Ukrainian regions’ results

Kyiv

Rank 1

Dynamics of Competitiveness Index, score

zzFor three years running Kyiv has outperformed the other 26

regions of Ukraine, leading pillars out of twelve: infrastructure, technological readiness and market size

4.26

4.37

4.40

2012

2013

zzInstitutions and financial market development are traditional

weaknesses for the capital city zzThis year policy instability has become the first most problematic

factor for businesses in Kyiv overtaking corruption and tax regulations for the first time 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.46

5.12

4.20

5.73

5.16

4.19

4.69

4.03

4.38

3.71

3.98

3.27

2012

3.32

5.03

4.52

5.79

5.08

3.97

4.82

3.96

4.29

3.69

3.91

3.14

2011

3.18

4.89

4.17

5.84

4.99

3.85

4.89

3.80

4.21

3.58

3.87

2.96

In 2013 Kyiv continues to top Ukrainian National Competitiveness Report since the introduction of the index. The overall score of Kyiv is 4.4, which is 0.34 higher than Ukraine’s overall score in the GCI prepared by the World Economic Forum. Kyiv has improved year on year, whilst Ukraine’s performance has worsened. The city’s aggregate competitiveness score is at 51st position in the global ranking, nearly matching that of Latvia, Lithuania and Italy. In the CIS, only Kazakhstan and Azerbaijan can boast better results. Kyiv is a top performer in efficiency enhancers, the sub-index combining 6 pillars and being the most important for Ukraine’s development stage today. This accounts for 50% in the overall competitiveness index. Kyiv’s score in the sub-index corresponds to 48th position in the global ranking, at the same level as Turkey and Lithuania and higher than Russia and Kazakhstan. Figure 5.12

The city has shown a rise in 10 out of 12 pillars year on year, except in labour market efficiency, where Kyiv has been underperforming for the past three years. However, the labour market efficiency along with infrastructure, higher education and training and technological readiness are still relative competitive advantages in international comparison. Financial market development and institutions remain the weakest pillars of Kyiv’s competitiveness. On the latter the capital rounds up the national report and is outside top 100 globally. Goods market efficiency (up 0.23), institutions (up 0.13) and innovation (up 0.12) see the biggest increase in scores, whilst labour market efficiency drops the most, losing 0.12 scores. The infrastructure remains a competitive strength of the capital city both in Ukraine and in the world. In 2013, Kyiv moves ahead of Ukraine’s average (by 30%),

Kyiv’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.40

Institutions

3.46

Infrastructure

5.12

Macroeconomic environment

4.20

Health and primary education

5.73

Higher education and training

5.16

Goods market efficiency

4.19

Labor market efficiency

4.69

Financial market development

4.03

Technological readiness

4.38

Market size

3.71

Business sophistication

3.98

Innovation

3.27 1

Kyiv Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Venture capital is almost unavailable. Kyiv’s score is at the level of 104th place out of 148 nations in the global index. Echoing Ukraine’s average perception, policy instability (17.2% of executives) dominates the list of the most problematic factors for doing business. In contrast to Ukraine’s average, Kyiv businessmen see corruption (15.3%) as the second concern, while tax regulations that led the ranking last year now take only the 3rd place (14%). Corruption was mentioned 1.3 times more frequently than on average across Ukraine and 2.4 times more frequently than in Sumy and Chernivtsi. Business executives in the capital believe that inefficient government bureaucracy is also a largest issue than their peers across Ukraine. At the same time, inadequate supply of infrastructure, inadequately educated workforce and access to land plots are less pressing for Kyiv.

CHAPTER 5. Ukrainian regions’ results

with the score corresponding to 32nd place in the global index. The high position comes first and foremost from strong performances in mobile telephone subscriptions and fixed telephone lines (1st and 2nd respectively) as well as the quality of railroad infrastructure and air transport infrastructure (6th and 1st). While the score for the quality of overall infrastructure is the highest in Ukraine, Kyiv ranks 48th in the global index. The quality of roads is the weakest indicator showing a downturn trend. The city takes 4th place in this indicator in Ukraine and 74th globally. Kyiv retains solid leadership in Ukraine in higher education and training, taking a high 28th place in the GCI. The result is traditionally down to top scores for secondary (1st in the national ranking and 39th in the global ranking) and tertiary (1st nationally and 1st globally) education enrollment rates. However, the city takes 49th position in the world for the quality of education, with the biggest lag behind global leaders in the quality of management schools and extent of staff training. Kyiv would not make it even in top 100 of the global index in both indicators. Unchallenged leadership of the city in technological readiness in Ukraine (the gap from the second place is almost 1 point) looks less optimistic in the international comparison where Kyiv only reaches 46th position. The result is still better than the performance of any nation in the CIS or many countries of the CEE, largely in regards to a high number of fixed telephone lines and Internet users. However, Kyiv is dramatically behind for technology adoption. In particular, local businesses give very low scores to availability of latest technologies, at the level of 123rd place globally. Despite a decline in score, Kyiv keeps its competitive advantage in labour market efficiency in the national report (8th place), at the level of 31st place in the global index. Interestingly, Kyiv receives high scores for the capacity to attract talent from other countries and Ukrainian regions (1st nationally and 31st globally). At the same time, the Oblast’s 1st place for the capacity to retain talent in Ukraine corresponds only to the 90th position in the GCI. Institutions are traditionally the weakest pillar for Kyiv, where the city has been at the bottom of the national index for 3 consecutive years (105th place globally). The city is Ukraine’s worst performer in 13 out of 19 indicators, with the lowest scores for intellectual property protection, diversion of public funds, public trust of politicians, judicial independence, favouritism in decisions of government officials, burden of government regulation, efficiency of legal framework in settling disputes and organized crime. Scores for all these indicators correspond to those featuring outside top 100 of the global index. However 2 indicators remain relative competitive advantages of the capital notwithstanding some drop in the position: business costs of terrorism (25th globally) and efficacy of corporate boards (23rd globally). Financial market in the capital is recovering slower than in other regions. Despite an improvement in score, Kyiv loses four positions on this pillar this year, ranking 24th nationally. The problems come mostly from lack of confidence in the soundness of banks (25th place) and from inefficient regulation of securities exchanges (22nd place). As with the previous year, access to financing through banks or equity market is extremely difficult in the capital.

Kyiv ranks 3rd among 27 regions of Ukraine by population (6.2%) and 1st by share in Ukraine’s GDP (17.2%). The gross regional product per capita is UAH 79,729 or 279.9% of the national average.

CHAPTER 5. Ukrainian regions’ results

Kyiv Oblast

Rank 7

Dynamics of Competitiveness Index, score

zzThe Oblast tops the health and primary education pillar and takes

4th place on the market size and 8th on goods market efficiency zzTechnological readness and innovations remain the biggest

4.04

4.12

4.06

2012

2013

concern in the Oblast zzSurpassing corruption and tax regulations, policy instability has

topped the most problematic factors for doing business in the region for the first time ever 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.80

4.07

4.20

5.97

4.32

4.18

4.64

4.10

2.99

2.76

3.91

2.93

2012

3.82

4.07

4.52

5.97

4.38

4.12

4.80

4.06

3.23

2.67

3.89

2.92

2011

3.75

3.94

4.28

5.94

4.34

3.95

4.79

3.89

3.60

2.36

3.77

2.93

In 2013, Kyiv Oblast has dropped two more positions, taking 7th position in the national report, this trend persisting since 2011. The region’s competitiveness index is 4.06 points, 0.02 points above Ukraine’s score in WEF’s Global Competitiveness Index. Kyiv Oblast has improved since last year, while Ukraine in whole has followed a downward trend. The Oblast’s overall competitiveness index corresponds to 84th place in the global ranking of 148 nations, matching the same scores as Iran, Uruguay and Tunisia. The region’s strengths in are areas covered by the basic requirements in sub-index’s and also including four pillars: institutions, infrastructure, macroeconomic environment as well as health and primary education. However the Oblast score for the sub-index’s are relatively low placing the Oblast 76th in the global ranking, the same as Armenia but above Romania. Figure 5.13

Compared with 2012, Kyiv Oblast has improved its scores in five of twelve competitiveness pillars: goods market efficiency, financial market development, market size, business sophistication and innovations. The Oblast is one of the top performers in health and primary education, market size and goods market efficiency. Higher education and training, innovations and business sophistication are the weakest pillars for the Oblast. Nevertheless, these strengths and weaknesses are not particularly significantly, in placing Kyiv Oblast between 50th and 100th positions in the global rankings. The Oblast has lost most scores for technological readiness (-0.24 points) and labour market efficiency (-0.16), while gained a little in the market size (+0.09), goods market efficiency (+0.04) and financial market development (+0.04). The health and primary education pillar keeps being a dominating competitive advantage for the Oblast amongst

Kyiv Oblast’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.06

Institutions

3.80

Infrastructure

4.07

Macroeconomic environment

4.20

Health and primary education

5.97

Higher education and training

4.32

Goods market efficiency

4.18

Labor market efficiency

4.64

Financial market development

4.10

Technological readiness

2.99

Market size

2.76

Business sophistication

3.91

Innovation

2.93 1

Kyiv Oblast Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Kyiv Oblast ranks 10th out of 27 Ukrainian regions by population (3.8%) and 6th by share in the national GDP (4.5%). The gross regional product per capita is UAH 34,420 or 120.8% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

the Ukrainian regions, corresponding to 50th position globally the same as Lithuania and UAE. This high position is primarily down to high primary education enrollment rate and low infant mortality (1st and 2nd respectively) as well as the quality of railroad and air transport infrastructure (1st and 6th). Although the Oblast’s infant mortality is one of the lowest in Ukraine, it still only corresponds to 41st position globally. The weakest indicators in the health sub-pillar are the business impacts of HIV/AIDS and tuberculosis (21st and 19th respectively). Kyiv Oblast’s market size is placed high in 4th place in the Ukraine, which corresponds to markets of Moldova or Kyrgyz Republic (123rd place globally ). This high position is due to firstly a high domestic market size index (4th nationally and 118th globally) and imports as a percentage of GDP (3rd and 43rd). However, exports as a percentage of GDP dropped by 3 positions last year (11th and 103rd). The Oblast ranks 8th for goods market efficiency, having lost its last year’s leadership. Nevertheless, the result falls behind the performances of many of the CIS and CEE nations. Kyiv Oblast is amongst the top performers in Ukraine because of its high degree of customer orientation (2nd). However at the same time, the Oblast significantly falls behind other Oblasts in terms of extent and effect of taxation (27th nationally and 130th globally), business impact of rules on FDI (25th and 117th) and burden of customs procedures (25th and 106th). The Oblast delivers the worst performance in the higher education and training pillar, taking 21st place in the Ukraine Competitiveness Report. This corresponds to 82nd position in the global ranking, slightly below Slovakia and Romania, but above Turkey. The Oblast has the lowest scores for tertiary education enrollment rate (25th nationally and 58th globally), quality of math and science education (20th and 87th) and availability of engineers (19th and 66th). Kyiv Oblast, however, enjoys competitive advantages for its high secondary education enrollment rate (1st), quality of the educational system (9th) and Internet access in schools (10th amid regions). The Oblast’s score on the innovations pillar is traditionally low (2.93), placing it in 20th position amongst the Ukrainian Oblasts and 108th position in the GCI, which is the same level as Mongolia. The Oblast has a very low company spending on R&D (26th nationally and 131st globally), university-industry collaboration in R&D (21st and 130th) and government procurement of advanced technology products (20th and 122nd in the world). Policy instability dominates the most problematic factors for doing business in Kyiv Oblast, similar to the average assessment across Ukraine. Altogether, 17.2% of respondents cited policy instability as the most important issue. In contrast to the Ukraine’s average score, corruption takes 2nd place (15.3%), followed by the last year’s leader, tax regulations (14%). Businesses referred to corruption more often than on average in the rest of the Ukraine, e.g. twice as often as that in Sumy and Chernivtsi Oblasts. Business executives in the Kyiv Oblast, far more often than their peers across Ukraine, believe that inefficient government bureaucracy is a major concern for businesses. However local government instability, restrictive labor regulations, inadequately educated workforce and poor access to land plots are less pressing issues in this Oblast.

CHAPTER 5. Ukrainian regions’ results

Luhansk

Rank 21

Dynamics of Competitiveness Index, score

zzLuhansk features in the top half of Ukrainian regions by their

market size, innovations as well as higher education and training. zzThe Oblast lags behind others by technological readiness, labour

3.87

market efficiency and financial market development.

3.93

3.96

2012

2013

zzPolicy instability, tax regulations and corruption are the most

problematic factors for doing business in this Oblast.

2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.79

3.67

4.20

5.69

4.57

4.09

4.49

4.08

2.78

2.47

3.93

3.03

2012

3.70

3.71

4.52

5.72

4.49

3.95

4.70

3.96

2.88

1.82

3.97

3.06

2011

3.60

3.73

4.06

5.70

4.42

3.74

4.74

3.81

2.82

2.20

3.98

2.96

In 2013, Luhansk has dropped one place to 21st position in Ukrainian National Competitiveness Report, yet its aggregate score has grown 0.02 points to 3.96, reaching 90th place in the GCI. The overall competitiveness index has increased by 0.08 points over three years. Nevertheless, the Oblast has lost eight positions over the same period. The Oblast has seen the biggest drop on business sophistication (down 11 places) and innovations pillar (down 5 places). Luhansk falls by 14 positions for local supplier quality and 9 positions for the nature of competitive advantage and extent of marketing. This year business executives give lower scores to company spending on R&D (down 8), quality of railroad infrastructure (down 7), quality of management schools (down 8), PCT patent applications (down 6) and exports as a percentage of GDP (down 4). On the other hand, the Oblast has Figure 5.14

improved across many dimensions of the institutions pillar, increasing 4 places to 16th position in the national ranking. The Oblast rises by 16 places in the transparency of government policymaking and 7 places in the public trust of politicians, ethical behavior of firms and protection of minority shareholders’ interests. Local businessmen give higher assessment of the effectiveness of anti-monopoly policy (up 11), buyer sophistication (up 5) and other indicators. The Oblast receives its highest scores for the market size (8th), higher education and training (10th) as well as innovations (13th). The Oblast loses out to others in technological readiness (27th), labour market efficiency (25th) and financial market development (22nd). This year Luhansk has considerably improved its performance on the market size pillar, taking 8th place

Luhansk’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.96

Institutions

3.79

Infrastructure

3.67

Macroeconomic environment

4.20

Health and primary education

5.69

Higher education and training

4.57

Goods market efficiency

4.09

Labor market efficiency

4.49

Financial market development

4.08

Technological readiness

2.78

Market size

2.47

Business sophistication

3.93

Innovation

3.03 1

Luhansk Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Luhansk ranks 7th among 27 regions of Ukraine by population (5%) and 7th by share in Ukraine’s GDP (4.4%). The gross regional product per capita is UAH 25,067 or 88% of the national average.

CHAPTER 5. Ukrainian regions’ results

out of 27 Oblasts. The improvement comes from higher domestic market size index, with the score growing by more than one position. Nevertheless, the result corresponds to a low 134th position in the global ranking. In 2013, the Oblast moves up three positions to take 10th place on the higher education and training pillar. The Oblast can boast of a high tertiary education enrollment rate (8th in Ukraine and 24th in the world), quality of primary education (8th) and availability of research and training services (12th and 43rd). Notwithstanding this high assessment, top managers cite low commitment of the business to invest in the extent of staff training, where the Oblast takes the lowest place in Ukraine. Luhansk maintains its relative competitive advantage on the innovations pillar (13th) though it has lost 5 places. Business executives give relatively high scores for the quality of scientific research institutions (10th), company spending on R&D (12th), government procurement of advanced technology products (12th) and availability of scientists and engineers (12th). Yet poor capacity for innovation (22nd) and low quantity of PCT patent applications (17th) hamper the Oblast’s competitive growth. Technological readiness does not boost regional competitiveness placing the Oblast at the bottom of the national ranking (27th, down 3 places). Luhansk falls 7 positions in the FDI and technology transfer, by 4 in the availability of latest technologies and by 3 in the firm-level technology absorption, ranking 25th, 26th and 27th respectively. Scores for indicators in the pillar are also low. The Oblast ranks 24th by the fixed telephone lines per 100 people, 21st by Internet users and 18th by broadband Internet subscriptions. This year Luhansk deteriorates in the labour market efficiency, falling 4 places to rank 25th. The decline is primarily down to lower scores for the efficient use of talent indicators. Business executives give lower marks than last year to pay and productivity (down 6 places), reliance on professional management (down 1) and flexibility of wage determination (down 2). As a result, the Oblast has fallen to the lowest place in Ukrainian National Competitiveness Report in the latter indicator. Despite a slight improvement in score for financial market development (up 0.12), the Oblast drops 3 spots to 22nd place. This indicates that the estimates of the other regions have grown faster. The Oblast performs worse in the soundness of banks (down 14 places) and affordability of financial services (down 7 places) and has inefficient financial market, ranking 27th by affordability of financial services, 24th by availability of financial services and 24th by venture capital availability At the same time, ease of access to loans is ranked fairly high; 6th out of 27 Ukrainian regions. Top 3 most problematic factors coincide with Ukraine’s average assessment. Altogether, 19% of local senior managers regard policy instability as the biggest hurdle for business’, 13% cite tax regulations and 12% mention corruption. Compared with other regions in general, Luhansk businessmen are more concerned with inefficient government bureaucracy; 10% see it as their biggest challenge.

CHAPTER 5. Ukrainian regions’ results

Lviv

Rank 6

Dynamics of Competitiveness Index, score

zzLviv Oblast has relative competitive advantages in health and

primary education, higher education and training, technological readiness and innovation.

4.07

4.00

3.88

zzThe Oblast trails other Oblasts in goods market efficiency,

institutions and business sophistication. zzThe most problematic factors for doing business have not changed

since last year; policy instability, tax regulations and corruption. 2011

2012

2013

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.75

3.82

4.20

5.90

4.80

4.04

4.67

4.15

3.17

2.59

3.88

3.17

2012

3.55

3.62

4.52

5.91

4.64

3.89

4.68

4.02

3.13

2.53

3.75

2.96

2011

3.46

3.61

4.07

5.86

4.61

3.80

4.70

3.84

2.99

2.26

3.71

2.87

This year Lviv has climbed to 6th place in Ukrainian National Competitiveness Report (10th in 2012). The overall index of the Oblast is 4.07, just above Ukraine’s score in the GCI prepared by the World Economic Forum (4.01). Lviv has increased its score year on year, whilst Ukraine has shown an overall decline. The overall competitiveness index of Lviv corresponds to the 83rd place in the global rating of 148 nations, almost at the level of Bosnia and Herzegovina (4.02) and Slovakia (4.10). Lviv has performed better in all three sub-indices as compared with last year, seeing the largest progress in innovation and sophistication factors, where the Oblast gained 10 places to rank 9th with 3.52 points, and in basic requirements, where Lviv climbed 9 places to 14th position with 4.42 points. In the second sub-index, efficiency enhancers, the Oblast improves a little and receives 3.90 Figure 5.15

points (6th nationally and 87th globally, at the level of Georgia with 3.89). Compared with 2012, the Oblast has earned higher scores in a half of competitiveness pillars: labour market efficiency (10th, up 13 places), innovation (6th, up 9 places), infrastructure (12th, up 5 places), technological readiness (6th, up 3 places), business sophistication (21st, up 2 places) and institutions (21st, up 3 places). The biggest decline is in goods market efficiency, where Lviv takes 23rd place, dropping 4 positions. Health and primary education remain competitive strength of Lviv both in Ukraine (6th with 5.90 points) and globally. In 2013, the Oblast performs better than Ukraine’s average (5.84), at the level of Hungary (5.88) and higher than the Czech Republic (5.84). This impressive performance is driven by good results in HIV prevalence

Lviv’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.07

Institutions

3.75

Infrastructure

3.82

Macroeconomic environment

4.20

Health and primary education

5.90

Higher education and training

4.80

Goods market efficiency

4.04

Labor market efficiency

4.67

Financial market development

4.15

Technological readiness

3.17

Market size

2.59

Business sophistication

3.88

Innovation

3.17 1

Lviv Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

and 102nd), control of international distribution (26th and 56th) and value chain breadth (26th and 125th). The most problematic factors for doing business in the Oblast have not changed over the past year, echoing the average perception across Ukraine. The first place is taken by policy instability (16.6%) followed by tax regulations (14.5%) and corruption (11.7%). Executives of Lvivbased businesses are less concerned with restrictive labour regulations and foreign currency regulations. Lviv Oblast ranks 5th among 27 regions of Ukraine by population (5.6%) and 9th by share in the country’s GDP (4.0%). The gross regional product is UAH 20,490 or 83.4% of Ukrainian average.

CHAPTER 5. Ukrainian regions’ results

(5th), life expectancy (4th) and primary education enrollment rate (3rd), however the quality of primary education falls five places (14th). The Oblast receives low scores for business impact of HIV/AIDS (25th, down 7 positions), business impact of tuberculosis (17th, down 9 positions) and tuberculosis incidence (15th place). Business executives believe that the Oblast is relatively competitive in higher education and training, taking 7th place in Ukraine with 4.80 points, which corresponds to the level of Greece (4.81), Latvia (4.84) and puts Lviv in 42nd position globally. The Oblast retains excellent performance in the pillar firstly by leading in tertiary education enrollment rate (3rd nationally) and the quality of management schools (3rd). But if benchmarked internationally, Lviv is far less competitive in the latter indicator, taking only 109th position in the GCI. The Oblast is also among outsiders in terms of extent of staff training, ranking 26th nationally with 2.87 points or 144th globally. Fair performance in technological readiness (6th with 3.17 points) looks less optimistic in the global comparison where it corresponds only to 102nd place – worse than results of any CIS or CEE nation. The Oblast maintains its position due to high scores for broadband Internet subscriptions (3rd), Internet users (4th) and FDI and technology transfer (4th). Nevertheless, the scores match low positions (94th, 88th and 94th respectively) in the global index. Lviv receives poor results for availability of latest technologies (18th, down 7 positions, at the level of 142nd place globally) and firm-level technology absorption (23rd, down six positions, to 117th position in the global ranking). The Oblast receives much better scores for innovation (6th compared with 15th in 2012) with 3.17 points, which is above the national average (3.03) and corresponds to 74th place in the GCI. The increase results from progress in almost every indicator, particularly, capacity for innovation, where the Oblast has jumped 21 positions to 4th place, and university-industry collaboration in R&D (4th, up 5 places). However, government procurement of advanced technology products (24th) and intellectual property protection (21st) slow down the Oblast’s growth. The most problematic pillar for Lviv in 2013 is the goods market efficiency (23rd nationally and 100th globally) which receives low scores for extent and effect of taxation (26th with 2.85 points), agricultural policy costs (27th with 2.79 points), business impact of rules on FDI (24th) and buyer sophistication (24th). The only relative advantages of the Oblast in the national report are the prevalence of foreign ownership (4th) and imports as a percentage of GDP (5th). Lviv also lags behind in institutions, ranking 21st nationally and 81st globally. These low scores are down to poor performance in property rights (26th), efficiency of legal framework in settling disputes (24th) and reliability of police services (26th). The organized crime indicator (4th) is the only relative advantage of Lviv on the national scale. The Oblast also earns low aggregate score for business sophistication as it ranks 21st nationally and 79th globally. Among the most problematic areas the respondents mention low reliance on professional management (26th national and 88th globally ), willingness to delegate authority (24th

CHAPTER 5. Ukrainian regions’ results

Mykolayiv

Rank 19

Dynamics of Competitiveness Index, score

zzCompared with other Oblasts, innovation and infrastructure receive

relatively high assessment, ranking 9th and 10th respectively zzDespite a slight improvement in score, the Oblast ranks extremely

low on such pillars as health and primary education (23rd), business sophistication (23rd) and financial market development (27th)

3.87

3.97

3.96

2012

2013

zzTax regulations, policy instability, tax rates and corruption are the

largest barriers for doing business in the Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

2013

3.82

4.07

4.20

5.63

4.50

4.08

4.59

3.92

3.06

1.93

3.85

3.07

2012

3.70

3.97

4.52

5.61

4.41

3.93

4.75

3.88

3.14

1.99

3.82

3.15

2011

3.68

3.85

4.10

5.55

4.31

3.89

4.73

3.82

3.10

1.77

3.88

3.17

In Ukrainian National Competitiveness Report 2013, Mykolayiv falls to 19th place, down from 14th in 2012 and 11th in 2011. In 2012, the aggregate score increased from 3.87 to 3.97, but has dropped to 3.96 this year. Even such slight decline has led to a 5 place fall in the ranking of the Oblast, many other Oblasts however have increased their ranking . In general, Mykolayiv performs at the same level as South-Eastern European countries. In particular, the Oblast’s overall index of 3.96 corresponds to the GCI’s 89th position taken by Moldova. The Oblast receives relatively high marks for the basic requirements sub-index (4.43), which corresponds to 82nd place in the world – a bit below Bosnia and Herzegovina at 81st but above Romania at 87th. In innovation and sophistication factors, Mykolayiv performs at the level of 80th place in the global index, yet its score Figure 5.16

is still relatively low (3.46, like Croatia). The Oblast ranks among outsiders in the efficiency enhancers sub-index, matching 100th position in the GCI taken by Albania (3.68). Despite a decline in the national ranking, Mykolayiv has improved scores in most pillars: goods market efficiency (up 0.15 points), institutions (up 0.12), infrastructure (up 0.10), higher education and training (up 0.09), health and primary education (up 0.01), financial market development (up 0.04) and business sophistication (up 0.03). At the same time, the Oblast sees a drop in scores for three pillars of the efficiency enhancers: labour market efficiency (down 0.16), technological readiness (down 0.08) and market size (down 0.06). Its performance in innovation, a part of the innovation and sophistication factors sub-index, deteriorates as well, leading to a 0.09-point drop.

Mykolayiv’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.96

Institutions

3.82

Infrastructure

4.07

Macroeconomic environment

4.20

Health and primary education

5.63

Higher education and training

4.50

Goods market efficiency

4.08

Labor market efficiency

4.59

Financial market development

3.92

Technological readiness

3.06

Market size

1.93

Business sophistication

3.85

Innovation

3.07 1

Mykolayiv Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

infrastructure (5.02, at the same level as Morocco at 41st and a little below Latvia at 37th and Slovenia at 38th) and mobile telephone subscriptions (at the same level as Switzerland at 33rd and above Poland at 36th). A couple of indicators in the labour market efficiency are remarkable as well: pay and productivity (5.23, at the level of 6th place in the GCI the same as Taiwan) and cooperation in labouremployer relations (4.99, at the level of 29th place the same as Estonia). In the institutions pillar, transparency of government policymaking receives high scores (5.04, at the level of 19th position globally the same as Estonia). Among the most problematic factors Mykolayiv business executives cite tax regulations (15% of respondents), tax rates (11%), policy instability (14.5%), corruption (10.4%) and inefficient government bureaucracy (10%). Notably, tax regulations (21%) was the biggest barrier in 2012, whilst tax rates were less frequently mentioned (9.1%). The perception of the other 2 factors has hardly changed. Notwithstanding high assessment of some infrastructure indicators, 4.9% of local businessmen also mention inadequate supply of infrastructure as the major concern, above Ukraine’s average score of 4.1%.

CHAPTER 5. Ukrainian regions’ results

Meanwhile, Mykolayiv performs quite moderately across many dimensions in international comparison. They include, in particular, institutions indicators: judicial independence (2.79 points, at the level of 114th place the same as Romania), efficiency of legal framework in settling disputes and challenging regulations (2.96 and 2.98 respectively, at the same level as Albania at 120th and Macedonia at 112th). The Oblast also performs poorly in financial market development, with financing through local equity market (2.58) at the same level as 116th place, below Armenia at 115th, ease of access to loans (2.31) corresponding to 116th position, venture capital availability (1.96) between 129th rank of Serbia and 131st rank of Bosnia and Herzegovina and business impact of rules on FDI (2.99) like in Kyrgyzstan. Some technological readiness indicators are also weak: availability of latest technologies (3.32, similarly to performance of some African countries such as Burundi, Algeria, Burkina Faso ranking between 143th and 145th), firm-level technology absorption (4.32, at the level of 104th place the same as Romania) and FDI and technology transfer (3.60, at the same level as Kyrgyzstan at 137th). Mykolayiv scores low for business sophistication by the world standards, especially for value chain breadth (3.35, 106th) and production process sophistication (3.30, 110th). In the global ranking, these two places are taken by Bangladesh. In the pillar, the weak indicators also include extent of marketing (3.68, like Moldova at 105th) and willingness to delegate authority (3.43, like Romania at 100th). Finally, the following indicators of innovation pillar receive low assessment: company spending on R&D (2.84, at the level of 104th position the same as Romania), university-industry collaboration in R&D (3.17, at the level of 104th position the same as Serbia) and government procurement of advanced technology products (2.85, at the level of 123rd position the same as Serbia). Also, availability of scientists and engineers in this pillar scores 3.76, which is below 91st position (Bangladesh) and 92nd position (Macedonia) in the GCI. This poor performance in innovation is of a big concern for Mykolayiv, which has recently been renowned for its technological products. The situation becomes even more aggravated by low scores for indicators related to development, attraction and retention of skilled labour force. In particular, the Oblast’s extent of staff training scores 3.02, which corresponds to 140th place globally shared by Serbia, capacity to retain talent scores 2.73, between Russia (112th) and Poland (119th) and capacity to attract talent scores 2.16, similar to Macedonia (134th) and Lithuania (135th). Some health-related indicators should be highlighted as well: business impact of tuberculosis (4.28, at the level of 117th place the same as Vietnam), HIV prevalence (1.05, at the same level as Burkina Faso) and average life expectancy (69.7 years, a bit above Kyrgyzstan, Moldova and Russia which rank 98th, 100th and 101st respectively). Nevertheless, Mykolayiv receives relatively high scores for a number of indicators corresponding to the top 50 in the global ranking. This means these indicators contribute to the competitive advantages of the Oblast even on a global scale. First and foremost, they include some infrastructure dimensions: quality of railroad infrastructure (4.63, a bit below Czech Republic at 22nd), quality of port

In Ukraine, Mykolayiv ranks 18th by population (2.6%) and 13th by share in the country’s GDP (2.1%). The gross regional product per capita is UAH 23,402 or 82.1% of the national average. 99

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

Odesa

Rank 3

Dynamics of Competitiveness Index, score

zzOdesa Oblast receives highest scores for its goods market

efficiency, infrastructure and technological readiness zzIt suffers from poor quality of its institutions and low level of

4.18

4.10

financial market development

3.95

zzPolicy instability, tax regulations and inefficient government

bureaucracy (including permit and licensing system for doing business) remain the most problematic factors for doing business in the Odesa Oblast 2011

2012

2013

Evaluation of dynamics of regionâ&#x20AC;&#x2122;s results by 12 pillars of Competitiveness, score

100

2013

3.67

4.56

4.20

5.78

4.96

4.26

4.64

4.08

3.40

2.73

3.99

3.01

2012

3.44

4.43

4.52

5.80

4.76

3.96

4.68

3.92

3.42

2.63

3.86

2.87

2011

3.32

4.27

3.98

5.88

4.69

3.77

4.64

3.70

3.28

2.51

3.73

2.76

In 2013, Odesa Oblast has made a breakthrough in the Ukrainian National Competitiveness Index. It moves up to the 3rd place, ahead of the traditional leaders, Donetsk and Dnipropetrovsk Oblasts. Its aggregate competitiveness score has increased by 0.05 points to 4.15. As a result, the Oblast moves up from 6th place to the top three Oblasts since last year. Odessa is ranked 72nd globally out of 148 nations. This is comparable with Hungary, Russia and Ecuador. This year Odesa Oblast has improved its performance across the board. At the same time, despite a significant improvement, its performance is inconsistent across the pillars. It is among the top Oblasts in the first two subindices: basic requirements and efficiency enhancers (2nd and 5th places respectively compared with 4th and 5th last year). Still, it shows poor performance in innovations Figure 5.17

and sophistication factors (14th compared with 18th last year). It can be seen that the most encouraging trends are in innovation and sophistication factors (a gain of 0.14 points) and a slight improvement in the dimensions of basic requirements (a gain of 0.01 points) and efficiency enhancers (up 0.05). Odesa Oblast displays the best performance across the following pillars: goods market efficiency (1st), infrastructure (2nd), technological readiness (2nd), higher education and training (3rd). On the other hand, Odesa Oblast still faces important weaknesses in terms of the quality of institutions (26th) and financial market development (23rd). The Oblast has seen a significant improvement in goods market efficiency (up 11 positions), labour market efficiency (up 11), business sophistication (up 7) and innovations (up 6) compared with 2012.

Odesaâ&#x20AC;&#x2122;s perfomance by 12 pillars of competitiveness Competitiveness Index

4.18

Institutions

3.67

Infrastructure

4.56

Macroeconomic environment

4.20

Health and primary education

5.78

Higher education and training

4.96

Goods market efficiency

4.26

Labor market efficiency

4.64

Financial market development

4.08

Technological readiness

3.40

Market size

2.73

Business sophistication

3.99

Innovation

3.01 1

Odesa Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

independence (119th globally), low level of intellectual property protection (105th), favouritism in decisions of government officials (117th) and severe burden of government regulations (110th). Despite this negative trend there are three dimensions which can be seen as competitive advantages of Odesa Oblast. This includes transparency of government policymaking (26th globally), business costs of terrorism (23rd globally) and efficacy of corporate boards (24th globally). Despite some improvement in financial market development, the Oblast ranks a relatively low 23rd place nationally and 65th globally. According to Executive Opinion Survey, Odesa Oblast falls behind other Ukrainian Oblasts in regulation of securities exchanges and financing through local equity market (26th and 17th nationally and 133rd and 112th globally). Odesa Oblast faces the same hindrances for doing business as everywhere else in the Ukraine. This year policy instability is singled out by business executives as the number one problem (18.9%). Other importance challenges are tax regulations (14%), inefficient government bureaucracy (10.2%) and corruption (9.6%). The problem of regional customs policy is twice as important than for the Ukraine in general. Odesa Oblast ranks 6th among 27 regions of Ukraine by population (5.3%) and 5th by share in Ukraine GDP (4.7%). The gross regional product of the Oblast per capita is UAH 25,748 or 90.4% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

Odesa Oblast has improved its performance in 7 out of 12 pillars of competitiveness year-on-year, with the biggest improvement in scores relating to goods market efficiency (a gain of 0.3 points), institutions (up 0.23), higher education and training (a gain of 0.19 points), financial market development (up 0.15) and innovations (up 0.14). At the same time it has lost scores in) labour market efficiency (down 0.04) and technological readiness (down 0.02). Odesa Oblast has been following this negative trend for the last several years. At the same time, the labour market efficiency can be seen as relative competitive advantages for the Odesa Oblast and the country itself. Since last year the Oblast has shown the best performance in goods market efficiency, moving up to 1st place from 12th since last year. The Oblast features a notable improvement in such dimensions as degree of customer orientation (up 19 places from last year), business impact of rules on FDI (up 15 places since 2012) and buyer sophistication (up 2 places, 1st place among 27 regions of Ukraine). Despite the leading positions in goods market efficiency dimensions in the national ranking Odesa Oblast is ranked a relatively low 74th place in the global ranking, behind Portugal but ahead of Slovakia. It however falls significantly behind other nations and ranks poorly in burden of customs procedures (27th nationally and 131st globally) and agriculture policy costs (18th and 121st respectively). Like other Ukrainian Oblasts, the Oblast continues to face the problem of low prevalence of foreign ownership (135th globally). The Oblast shows a significant improvement in labour market efficiency, moving up 11 places to 13th (from 24th last year). It has also made considerable progress in such dimensions as cooperation in labour-employer relations (up 16 places), and pay and productivity (plus twelve positions, up from 26th to 14th). The weaknesses of the Oblast include reliance on professional management (24th nationally and 88th globally) and women in labour force (25th and 79th respectively). These dimensions have been deteriorating in Odesa Oblast over the last two years. Infrastructure remains the Oblast’s notable strength both in the national and global rankings. For the second year in a row, the Oblast ranks a high 2nd place (4.56) nationally and 45th globally. This is comparable to the level of the Republic of Cyprus, Lithuania and Estonia. The Oblast has very good quality port infrastructure (1st, 5.06 points) and high level of telephony penetration by national standards. By these two indicators the Oblast is competitive globally as well: 39th and 2nd positions among 148 nations. At the same time Odesa Oblast suffers from poor quality of electricity supply (25th nationally and 92nd globally). High level of technological readiness in the Oblast is the result of its strong performance in such sub-pillars as fixed telephone lines (1st nationally, 2nd – globally). Business executives of Odesa Oblast are not satisfied with the firm-level technology absorption (17th nationally and 110th globally). The Oblast continues to suffer from low availability of latest technologies (12th nationally and 140th globally). For three years in a row, the Oblast ranks near bottom of the national ranking in the institutions pillar (26th nationally and 85th globally). The institutional framework is undermined by concerns about judicial

101

CHAPTER 5. Ukrainian regions’ results

Poltava

Rank 9

Dynamics of Competitiveness Index, score

zzPoltava shows a solid performance in financial market develop-

ment, institutions and market size zzIt is ranked low due to poor performance in innovations, business

3.94

sophistication and labour market efficiency

4.02

2012

2013

zzPolicy instability, corruption and tax regulations are singled out

by business executives as the most problematic factors for doing business in Poltava Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

102

2013

3.94

3.75

4.20

5.80

4.53

4.14

4.57

4.22

3.04

2.42

3.88

2.91

2012

3.88

3.75

4.52

5.74

4.52

3.92

4.76

4.09

3.02

2.29

3.92

2.97

2011

3.83

3.89

3.95

5.71

4.58

3.87

4.81

3.98

2.90

2.12

3.94

3.06

As of last year, Poltava Oblast still ranks 9th, behind Zaporizhzhya Oblast and one place higher then the City of Sevastopol. Over the last two years its aggregate index has increased by 0.08 points to 4.02 which is below Ukraine’s overall score in the global ranking (4.04). Poltava Oblast is ranked 87th out of 148 economies, sharing the same score as Bosnia and Herzegovina but significantly lagging behind countries of CEE and most CIS countries. Poltava Oblast shows relatively good performance in efficiency enhancers: it ranks 89th globally, behind most countries of CEE and CIS and only ahead of Kyrgyzstan. Poltava Oblast has improved its scores in 8 out of 12 pillars of competitiveness since last year. The Oblast features a notable improvement in goods market efficiency (a gain of 0.22 scores), financial market development (up Figure 5.18

0.14 points) and market size (up 0.14 scores). It declines slightly in innovations (a loss of 0.04 scores) and business sophistication (down 0.04 scores). Its strengths include financial market development, institutions and market size. Poor performance in such pillars as innovations, business sophistication and labour market efficiency contributes to an environment that does not foster competitiveness. The Oblast ranks in the bottom half of the ranking in all the above mentioned pillars. It ranks a high 3rd place in financial market development which corresponds to 58th place in the global ranking. This places Poltava Oblast ahead of Romania, Bulgaria, Hungary, Georgia and Armenia. It receives high marks in soundness of banks (5th place nationally and 74th place globally). The Oblast shows good performance in stock market only as compared with other regions of

Poltava’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.02

Institutions

3.94

Infrastructure

3.75

Macroeconomic environment

4.20

Health and primary education

5.80

Higher education and training

4.53

Goods market efficiency

4.14

Labor market efficiency

4.57

Financial market development

4.22

Technological readiness

3.04

Market size

2.42

Business sophistication

3.88

Innovation

2.91 1

Poltava Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Poltava Oblast ranks 12th among 27 regions of Ukraine by population (3.2%) and 8th by share in Ukraine GDP (4.0%). The gross regional product of the oblast per capita is UAH 35,246 or 123.7% of Ukraineâ&#x20AC;&#x2122;s average.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

Ukraine: it ranks 6th place in the national ranking and 114th place globally in financing through local equity market and 4th place and 126th place respectively in regulation of securities exchange. Poltava Oblast falls behind other regions in availability and affordability of financial services. However, it is well positioned if you compare it globally: 51st place and 58th place respectively. Turning to the Oblastâ&#x20AC;&#x2122;s institutions, it ranks a very good 7th place in the national ranking and 68th globally out of 148 countries, at the level of Slovenia and behind Poland. The Oblast can boast very solid public institutions compared with other regions of Ukraine: diversion of public funds (1st place nationally and 43rd place globally), efficiency of legal framework in challenging regulations (4th and 77th place) and wastefulness of government spending (5th place and 23rd place) Despite poor transparency of government policymaking in the national ranking (21st place) Poltava Oblast is ranked a satisfactory 29th place in the global ranking. Private institutions get good marks for ethical behavior of firms: 3rd place nationally and 85th place globally. The Oblast is ranked 9th in the market size, showing high exports of goods and services as a percentage of GDP (49%), which corresponds to 53rd place in the global ranking. Germany, Switzerland and Kazakhstan have the same share of exports of goods and services as a percentage of GDP. Poltava Oblast demonstrates a significant drop in the innovation pillar (21st place, down 10 places since 2011). It ranks 109th place in the global ranking at the same level as Morocco, Trinidad and Tobago. Bulgaria has faced the same fall in the rankings in 2013. The reasons for this drop are a perceived deterioration in the quality of scientific research institutions (21st place nationally and 112th place globally) and university-industry collaboration in R&D (22nd place and 130th place respectively). Government procurement of advanced tech products does not contribute to developing the innovation potential of the Oblast: 19th place nationally and 122nd place globally. At the same time Poltava Oblast displays a high capacity for innovation (5th place nationally and 31st place globally; at the same level as Italy and Iceland) and high company spending on R&D (7th place and 84th place respectively). Poltava Oblast is ranked a low 20th place in the business development pillar (79th place globally, performing worse than Azerbaijan but better than Greece). Low local supplier quantity (27th place nationally and 112th place globally), nature of competitive advantage (21st place and 84th place respectively) and value chain breadth (18th place and 109th place) are seen as obstacles to doing business in the Oblast. Compared with other Ukrainian regions Poltava Oblast has a high level of control of international distribution (5th place nationally and 16th place globally) and good reliance on professional management (10th place and 71st place). The business community cite policy instability as the largest hindrance to doing business in Poltava Oblast (15.4%). Other significant hindrances include corruption (12.2%) and tax regulations (11%). The score in corruption is slightly above the national average. In addition, the Oblast is more concerned about inadequately educated workforce (8% against the national average of 4.8%) and access to land plots (5.6% against the national average of 2.4%), while inefficient government bureaucracy and inflation are not big areas of concern.

103

CHAPTER 5. Ukrainian regions’ results

Rivne

Rank 12

Dynamics of Competitiveness Index, score

zzRivne maintains its position due to good performance in goods

market efficiency, institutions and financial market development zzOverall, Rivne’s competitive edge is hampered by its small market

size and low technological readiness

3.98

4.00

2012

2013

3.81

zzPolicy instability, tax regulations and corruption are singled out by

business executives as the greatest obstacles to doing business in Rivne Oblast 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

104

2013

3.95

3.77

4.20

5.83

4.57

4.16

4.71

4.23

2.98

1.83

3.96

3.05

2012

3.97

3.57

4.52

5.80

4.62

4.00

4.89

4.09

2.88

1.72

3.93

3.02

2011

3.82

3.50

4.06

5.73

4.48

3.84

4.95

3.78

2.63

1.51

3.76

2.86

For the second year in a row, Rivne Oblast ranks 12th in the Ukrainian National Competitiveness Index. Over the last three years the Oblast has gained 5 positions overall. Its index has increased by 0.02 points (or by 0.19 points over the last two years). Its score of 4 points corresponds to 89th place out of all 148 nations in the sample. In 2013, Rivne Oblast improves its positions in 8 out of 12 pillars of competitiveness. The efficiency of its institutions and labour market has slightly deteriorated. It has lost scores in the number of different dimensions of different pillars: venture capital availability (down 18 places), public trust of politicians (down 16 places), nature of competitive advantage (down 13 places) and quality of maths and science education (down 11 places). On the other hand, the Oblast improves its performance in agricultural policy costs (up 13 places), availability of Figure 5.19

financial services (up by 11 places), business impact of tuberculosis (up by 11 places) and business costs of crime and violence (up by 11 places). It shows quite even performance across certain subindices. In 2013 Rivne Oblast moves up 4 positions to 9th in basic requirements but at the same time it loses several positions in the other two sub-indices. It loses 1st place in efficiency enhancers and 2nd place in innovation and sophistication factors (ranking 12th this year). It receives its best scores for financial market development (2nd out 27 regions), institutions (4th) and labour market efficiency (6th). At the same time low positions of the Oblast in market size and technological readiness do not help the Oblasts competitiveness. In 2013, Rivne Oblast moved up 2 places to 2nd in the financial market development pillar, with a gain of

Rivne’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.00

Institutions

3.95

Infrastructure

3.77

Macroeconomic environment

4.20

Health and primary education

5.83

Higher education and training

4.57

Goods market efficiency

4.16

Labor market efficiency

4.71

Financial market development

4.23

Technological readiness

2.98

Market size

1.83

Business sophistication

3.96

Innovation

3.05 1

Rivne Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Rivne Oblast ranks 19th among 27 regions of Ukraine by population (2.5%) and 21st by share in Ukraine GDP (1.5%). The gross regional product of the oblast per capita is UAH 16,735 or 58.7% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

0.14 points. Its score of 4.23 points corresponds to 57th place globally (out of 148 nations). Rivne Oblast is also ranked 2nd place in several dimensions of this pillar; availability of financial services and ease of access to loans. Its performance corresponds to 36th and 50th places respectively in the global ranking. For the second year in a row. Rivne Oblast is among the top five Oblasts in the institutions pillar. Despite a loss of 0.02 points the Oblast retains its 4th position in the national ranking. The score of 3.95 points corresponds to a high 68th place in the global ranking. Rivne’s performance is very even in the public and private institutions dimensions. Compared with other Oblasts, business executives of the Oblast give very positive assessment of such dimensions as diversion of public funds (4th) and wastefulness of government spending (4th). The weakest dimension of the institution pillar is public trust of politicians, which is ranked 22nd out of 27 regions (a drop of 16 places from last year). For the third year in a row, Rivne Oblast ranks high in the national ranking in labour market efficiency with its score of 4.71 corresponding to 31st position in the global ranking. This year Rivne Oblast ranks 6th nationally with a loss of 0.18 points and 4 positions in the ranking. The most significant deterioration refers to the use of talents. It also drops 7 positions to 10th place in the national ranking in pay and productivity. Rivne Oblast retains a relatively high position in cooperation in labour-employer relations: up 3 places to 6th this year. At the same time, low flexibility of wage determination (25th), poor hiring and firing practices (23rd) and lack of capacity to attract talents (20th) continue to constrain growth in this dimension. Rivne Oblast falls behind other regions in market size. The Oblast is ranked 22nd in this pillar, retaining the same place as last year – mainly due to relatively low capacity of domestic and foreign markets. Export as percentage of GDP has reduced since last year (down 5 places). Rivne Oblast is among the bottom ten regions in the technological readiness pillar. This year it ranks 21st out of 27 regions nationally, up 2 places from last year. This corresponds to 112nd place out of 148 countries in the world. The Oblast has improved its performance across the pillar except for one dimension: it has dropped 8 places to 26th in broadband internet subscriptions. Rivne Oblast remains near the bottom of the ranking in ICT use; fixed telephone lines (25th), Internet users (24th nationally and 101st globally) and mobile telephone subscriptions (24th and 85th respectively). On the other hand, it is among the top three regions in firm-level technology absorption (3rd nationally and 84th globally). The Oblast promotes greater use of the latest technologies, being placed 10th in the Ukrainian National Competitiveness Index. However, this corresponds to a low 136th place in the global ranking. The three most problematic factors for doing business in the Oblast are the same as for Ukraine in general. Rivne business community repeatedly cites policy instability as the most problematic factor for doing business (15.7%). The other two important hindrances include tax regulations and corruption (13.4%). The problem of access to financing seems to be more important than in other regions: 8.7% of respondents in Rivne Oblast are concerned with this problem (against 6.5% of respondents in Ukraine overall).

105

CHAPTER 5. Ukrainian regions’ results

Sevastopol

Rank 10

Dynamics of Competitiveness Index, score

zzSevastopol has competitive advantages in infrastructure,

innovation and higher education and training zzThe city falls behind other regions in market size, institutions and

financial market development

3.96

4.02

4.01

2011

2012

2013

zzThe tax regulations dominate the most problematic factors for

doing business, followed by inefficient government bureaucracy and policy instability

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

106

2013

3.69

4.51

4.20

5.71

4.87

4.07

4.61

4.08

3.12

1.23

3.93

3.35

2012

3.64

4.33

4.52

5.87

4.82

3.88

4.67

4.02

3.28

1.17

3.91

3.36

2011

3.70

4.33

3.93

5.97

4.85

3.86

4.67

3.97

3.18

1.16

3.99

3.20

Sevastopol comes in at 10th in Ukrainian National Competitiveness Report 2013, falling two positions since last year. Over the past twelve months the city’s competitiveness score has gone down 0.01 points to 4.01, ranking it 90th in the GCI. Sevastopol performs worse in two of three sub-indices, taking 4th place in basic requirements (3rd in 2012) and 22nd in efficiency enhancers (19th in 2012). The city’s position in innovation and sophistication factors has not changed: it still ranks 4th in Ukraine as in the previous year. Sevastopol has bettered its scores in seven out of twelve pillars, while deteriorating in the other five. The City gains most in goods market efficiency (up 0.19) and infrastructure (up 0.18) and sees the largest decline in health and primary education (down 0.16) and technological readiness (down 0.16). Figure 5.20

Infrastructure remains a competitive advantage of the city – 3rd in Ukraine, which corresponds to 49th position globally (same as Croatia and Czech Republic) and is higher than all CIS nations and a number of CEE countries. The city has climbed one position on this pillar over the past year and performs strongly thanks to good scores for the quality of roads (1st nationally and 50th globally), quality of port infrastructure (4th and 51st) and quality of electricity and telecommunication infrastructure (3rd and 43rd). The quality of air transport infrastructure (119th globally) and available seat kilometers (148th) remain a concern in the pillar. Higher education and training is one of the strongest pillars of Sevastopol’s competitiveness. The city takes 6th place in Ukraine, at the level of 39th position (Czech Republic) in the global index. The best indicators include

Sevastopol’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.01

Institutions

3.69

Infrastructure

4.51

Macroeconomic environment

4.20

Health and primary education

5.71

Higher education and training

4.87

Goods market efficiency

4.07

Labor market efficiency

4.61

Financial market development

4.08

Technological readiness

3.12

Market size

1.23

Business sophistication

3.93

Innovation

3.35 1

Sevastopol Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Sevastopol ranks 27th by population and share in the national GDP (0.8% and 0.7% respectively). The gross regional product per capita is UAH 24,564 or 86.2% of the Ukrainian average.

CHAPTER 5. Ukrainian regions’ results

secondary education enrollment rate (1st nationally and 39th position globally) and Internet access in schools (1st and 36th). However, the city receives low scores for the quality of management schools and extent of staff training (130th and 143th in international comparison respectively). The city takes a relatively high 4th place in innovation. However this does not give a competitive advantage on the global scale. Its score of 3.35 out of 7 corresponds to 64th position in the global index. Sevastopol’s businesses evaluate relatively highly the quality of scientific research institutions (2nd nationally, 37th globally) and availability of scientists and engineers (2nd and 40th). The city performed solidly by the number of PCT patent applications as it ranks 2nd in Ukraine – at the level of 38th position in the GCI. At the same time, the City falls behind most countries by university-industry collaboration in R&D (6th nationally and 95th place globally), government procurement of advanced technology products (17th in and 119th) and intellectual property protection (15th and 96th). Health and primary education are no longer competitive advantages of Sevastopol. Over the past year Sevastopol has performed much worse in this pillar, descending from 7th to 16th place in the national report because of a dramatic decline in HIV prevalence (23rd nationally) and primary education enrollment rate (26th, down 14 places year on year). Sevastopol falls two positions to 24th place on institutions mostly because of deterioration in irregular payments and bribes (24th), favoritism in decisions of government officials (23rd), burden of government regulation (down four places to 24th) and protection of minority shareholders’ interests (down 9 places to 23rd). Local business executives are very critical about the efficiency of legal framework in settling disputes that cost Sevastopol a six-place fall (from 10th to 16th), which is at the level of 118th place globally. Compared with 2012, the city has lost much ground in financial market development (down 11 places). Sevastopol now ranks 21st in Ukraine (64th globally). This negative result comes from poor affordability of financial services (7th in 2013, 3rd in 2012), ease of access to loans (10th in 2013, 4th in 2012), soundness of banks (17th in 2013, 9th in 2012) and regulation of securities exchanges (27th this year). Sevastopol’s market size has traditionally seen the weakest performance. The city has been the lowest-ranked region (27th) on the pillar for three years running. The result can be attributed to the special status of Sevastopol as a city–region. Sevastopol is far behind other regions in domestic market size (27th) and foreign market size (25th). Business executives say the most problematic factors for doing business in the city have not changed over the year. Tax regulations are a number one hindrance (15.5% respondents mentioned it), followed by inefficient government bureaucracy (12.9%) and policy instability (12.3%). Local businessmen are more than their Ukrainian peers concerned about tax regulations, inefficient government bureaucracy, inflation and access to land plots. At the same time, they give less priority to policy instability, inadequately educated workforce and inadequate supply of infrastructure.

107

CHAPTER 5. Ukrainian regions’ results

Sumy

Rank 14

Dynamics of Competitiveness Index, score

zzIn 2013 the assessment of Sumy Oblast has slightly deteriorated:

it falls one position in the Ukrainian National Competitiveness Index, falling behind Khmelnytsky Oblast. Its relatively high position in the national ranking results from good performance in financial market development, business sophistication and goods market efficiency

3.84

3.98

2012

2013

zzThe Oblast lags behind other Oblasts in health and primary

education, infrastructure and technological readiness zzThe most problematic factors for doing business in the Oblast

include tax regulations, policy instability and tax rates 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

108

2013

3.94

3.63

4.20

5.61

4.60

4.19

4.61

4.26

2.99

1.96

4.05

3.05

2012

3.95

3.63

4.52

5.62

4.59

3.91

4.75

4.00

3.05

1.90

4.01

3.14

2011

3.82

3.69

4.01

5.61

4.58

3.66

4.79

3.88

2.75

1.66

3.93

3.11

Sumy Oblast has dropped one place to 14th position since last year (out of 27 regions of Ukraine). The Oblast maintains a score of 3.98 points, which is below Ukraine’s average both in the national and global rankings. In 2013, the index of Sumy Oblast corresponds to 89th position in the global ranking. The Oblast improves its performance only in efficiency enhancers (up 2 places to 10th), whilst the situation with the other 2 sub-indices has deteriorated. Its basic requirements are assessed at 22nd (down 4 positions) and its innovations and sophistication factors rank 8th (down 3 positions). Sumy Oblast has improved its performance in 4 out of 12 pillars compared with 2012. The major improvement is in goods market efficiency (up 0.28), financial market development (up 0.26) and business sophistication (up 0.04). Higher scores help the Oblast to significantly Figure 5.21

improve its positions in the global ranking but it is still too early to talk about any competitive advantages. At the same time Sumy Oblast loses points in labour market efficiency (a loss of 0.14 scores), innovations (down 0.09), health and primary education (down 0.01) and retains the same score in the infrastructure pillar. Over the year Sumy Oblast has significantly improved its performance in financial market development, moving up 14 positions to 1st among 27 regions of Ukraine. This corresponds to 57th place in the global ranking, at the same level as the Czech Republic and China. The Oblast shows good results in the pillar as a result of its strong performance in availability of financial services (1st place among 27 regions, 42nd globally), regulation of securities exchanges (1st nationally and 90th globally), and ease of access to loans (8th and 64th respectively). The second

Sumy’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.98

Institutions

3.94

Infrastructure

3.63

Macroeconomic environment

4.20

Health and primary education

5.61

Higher education and training

4.60

Goods market efficiency

4.19

Labor market efficiency

4.61

Financial market development

4.26

Technological readiness

2.99

Market size

1.96

Business sophistication

4.05

Innovation

3.05 1

Sumy Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Sumy Oblast ranks 20th among 27 regions of Ukraine by population (2.5%) and 16th by share in Ukraine GDP (1.8%). The gross regional product of the oblast per capita is UAH 19,800 or 69.5% of Ukraine’s average.

CHAPTER 5. Ukrainian regions’ results

year in a row only weak dimension in the pillar remains venture capital availability (27th and 133th respectively). Sumy Oblast can boast its relatively efficient goods market (up 11 positions to 6th since last year). Its goods market is characterized by efficient antimonopoly policy (1st nationally and 81st globally), business impact of rules on FDI (1st and 48th) and high degree of customer orientation (7th and 41th respectively). Still, there are a number of areas hampering the development of the Oblast in this pillar. The weaknesses include intensity of local competition (26th nationally and 127th globally) and, despite a slight improvement in the score, demonstrates low prevalence of foreign ownership (19th and 145th) and low level of buyer sophistication (26th and 69th). This year Sumy Oblast performs slightly better in the business sophistication pillar, climbing 1 place since last year. This corresponds to 66th place globally, at the same level as Portugal and Slovenia. The improvement is mostly the result of the Oblast’s strong performance in nature of competitive advantage (1st nationally and 40th globally), control of international distribution (retains its 1st place from the second year; 7th globally) and willingness to delegate authority (up 6 places, 1st and 46th respectively). Sumy Oblast experiences a sharp drop in technological readiness (down 8 positions to 19th nationally and 112th globally). This negative trend can be explained by low assessment of ICT use (down 6 places to 21st), low number of Internet users per 100 people (down 8 to 22nd), and low number of broadband internet subscriptions per 100 people (down 7 places to 19th). Sumy Oblast has slightly deteriorated its positions on infrastructure, down 4 positions to 20th over the year. Transport infrastructure ranks at the bottom in 27th place. . This can be explained by low quality of overall infrastructure (22nd nationally and 75th globally), poor quality of roads (at the very bottom of the national ranking (27th) and 127th globally), and quality of air transport infrastructure (22nd and 148th respectively). Sumy Oblast is among the worst performers in health and primary education (25th nationally and 78th globally), at the same level as Macedonia and Romania. It retains its positions in the pillar in the national ranking of last year due to very low marks for its primary education: quality of primary education (23rd nationally) and primary education enrolment rate (24th out of 27 Ukrainian regions). It’s need to note the changes in the importance of the most problematic factors for doing business in the Sumy Oblast. This year they single out tax regulations as the largest hindrance to doing business (17.7% of respondents), whilst last year it was policy instability. Policy instability is cited as problem number two in the Oblast (17.0% of respondents). Tax rates are also among the top three obstacles to doing business in Sumy Oblast (16.8%). Business community of the Oblast is also concerned with tax regulations, tax rates and inflation (with results above Ukraine’s average). At the same time, the problems of corruption, access to financing and inadequate supply of infrastructure are not in their priority list.

109

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

Ternopil

Rank 24

Dynamics of Competitiveness Index, score

zzThe Oblast scores best in health and primary education,

institutions and labour market efficiency zzAs with the previous year, the Oblast loses out to most Oblasts on

infrastructure, goods market efficiency, technological readiness, market size and innovation pillars

3.88

2012

2013

3.74

zzPolicy instability, corruption and tax regulations are the most

problematic factors for doing business in the Oblast 2011

Evaluation of dynamics of regionâ&#x20AC;&#x2122;s results by 12 pillars of Competitiveness, score

110

2013

3.88

3.31

4.20

5.93

4.47

4.01

4.64

4.10

2.89

1.70

3.81

2.87

2012

3.87

3.22

4.52

5.90

4.52

3.86

4.79

4.01

2.83

1.57

3.76

2.88

2011

3.75

3.28

3.94

5.82

4.53

3.67

4.67

3.84

2.73

1.30

3.65

2.92

This year Ternopil has lost 1 position and came 24th in the Ukrainian National Competitiveness Report yet retained the same aggregate score (3.88). The Oblast performed better in 2012 in the second and third sub-indices, this year falling from 23rd to 25th and from 22nd to 24th places among 27 regions of Ukraine. At the same time, the result for basic requirements has remained unchanged (24th). The Oblast receives better scores for all competitive pillars, excepting higher education and training, labour market efficiency and innovation. Yet the increase is insignificant and smaller than the increase of other Oblasts, leading to a drop in the national ranking. Ternopil has the strongest results in health and primary education (4th nationally and 53rd globally), institutions (11th and 71st) and labour market efficiency (14th and Figure 5.22

34th). Nevertheless, the Oblast scores in the bottom places for three consecutive years on infrastructure (27th), goods market efficiency (27th), technological readiness (25th) and market size (25th). Health and primary education pillar remains a relative competitive advantage of the Oblast both nationally and internationally (4th in 2013 and 5th in 2012). For 3 years Ternopil has been listed among the Oblasts with the least HIV prevalence (4th nationally and 41st globally). The Oblast also has a relatively good situation with tuberculosis incidence (6th nationally), however its still 76th globally. Despite relatively fair statistics, local businesses are concerned with the business impact of these diseases, which results in 77th and 107th positions in the global ranking respectively. Ternopil ranks 3rd in Ukraine for life expectancy, matching 83rd place globally. The Oblast has

Ternopilâ&#x20AC;&#x2122;s perfomance by 12 pillars of competitiveness Competitiveness Index

3.88

Institutions

3.88

Infrastructure

3.31

Macroeconomic environment

4.20

Health and primary education

5.93

Higher education and training

4.47

Goods market efficiency

4.01

Labor market efficiency

4.64

Financial market development

4.10

Technological readiness

2.89

Market size

1.70

Business sophistication

3.81

Innovation

2.87 1

Ternopil Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

domestic and foreign market size. In particular, the Oblast takes 26th place by foreign market size index and 22nd by domestic market size index (148th and 146th in the world respectively). The innovation pillar also shows a downward trend (23rd, down 7 places compared with last year). The weakest indicators of the pillar include the quality of scientific research institutions (25th, at the level of 119th place in the GCI), university-industry collaboration in R&D (20th and 129th) and availability of scientists and engineers (23rd and 130th). The top three most problematic factors for doing business in Ternopil have changed since last year. Policy instability ranks first with 16.9% of respondents followed by corruption (14.4%) and tax regulations (13.3%). Local businesses are on average more concerned than their Ukrainian peers about corruption, access to financing and inadequately educated workforce, while tax rates, inefficient government bureaucracy and inflation are of less priority to them.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

become competitive in primary education (6th, up from 11th in 2012) and primary education enrollment rate (4th, up from 5th in 2012), which corresponds to 64th and 50th places in the GCI respectively. For the 2nd consecutive year Ternopil achieves a high position on institutions (11th in 2013 and 10th in 2012). The Oblastâ&#x20AC;&#x2122;s score exceeds the national average and corresponds to 71st position globally. Business executives believe the Oblast has improved in the following indicators: business costs of crime and violence (1st, up 1), organized crime (1st, up 3), reliability of police services (1st, up 6), strength of auditing and reporting standards (1st), public trust of politicians (8th, up 6) and irregular payments and bribes (3rd, up 2 year on year). The score for business costs of terrorism corresponds to a high 7th place globally. At the same time, senior managers give lower assessment than last year to favoritism in decisions of government officials (9th, down 4), wastefulness of government spending (26th, down 4), ethical behavior of firms (24th, down 11) and protection of minority shareholdersâ&#x20AC;&#x2122; interests (21st, down 6 places). Labour market efficiency remains a competitive advantage of the Oblast (14th in the national index and 34th in the global index) due to strong performance in hiring and firing practices (6th, up 18 year on year, 22nd globally) and pay and productivity (13th, up 6 positions, 7th globally). Reliance on professional management (21st in the national ranking and 83rd in the GCI), the most problematic indicator in the pillar, has not changed and remains at the same level as last year. Ternopil is at the bottom end of the national report on the infrastructure pillar (102nd globally). For 3 years running local businessmen have been reporting low quality of overall infrastructure (25th) and road infrastructure in particular (22nd) as well as low quality of air transport infrastructure (24th). Ternopil also underperforms in the development of electricity and telecommunication infrastructure, receiving low scores for quality of electricity supply and mobile telephone subscriptions (21st and 26th respectively). The Oblast has a relatively strong position in the quality of railroad infrastructure (13th). Goods market efficiency is one of the weakest areas in Ternopil (27th nationally and 104th globally); the Oblast has lost four positions since last year. A noticeable drop on the pillar is caused by low scores for indicators showing intensity of local competition (23rd, down 6 places), agricultural policy costs (23rd, down 11 places) and prevalence of foreign ownership (25th, down 11 places). Nevertheless, the Oblast performs well even by international standards in a number of goods market efficiency indicators: prevalence of trade barriers (3rd nationally and 44th globally) and extent of market dominance (13th and 49th). Ternopil ranks 25th in the national report on technological readiness because of low availability of the latest technologies (22nd, up 1 year on year), firmlevel technology absorption (26th, down 10) and FDI and technology transfer (19th, up 4) as well as mobile telephone subscriptions (26th). The Oblast has improved much in terms of broadband Internet subscriptions (12th, up 7) and Internet users (13th, up 9). As in the previous year, the Oblast has taken 25th position on the market size pillar because of low scores for

Ternopil ranks 23th among 27 regions of Ukraine by population (2.4%) and 25th by share in the national GDP (1.3%). The gross regional product is UAH 15,055 or 52.8% of the Ukrainian average.

111

CHAPTER 5. Ukrainian regions’ results

Vinnytsya

Rank 16

Dynamics of Competitiveness Index, score

zzThe Oblast gained 2nd place on institutions, 7th on labour market

efficiency and 12th on innovations pillar zzHigher education and training, infrastructure as well as health and

primary education are major issues in the Oblast

3.86

3.97

2012

2013

zzExcluding corruption and tax regulations, policy instability

dominates among the most problematic factors for doing business in this Oblast. 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

112

2013

3.99

3.71

4.20

5.68

4.32

4.12

4.71

4.11

3.07

2.05

3.96

3.05

2012

3.89

3.65

4.52

5.74

4.26

4.03

4.85

3.99

3.05

1.94

3.90

2.99

2011

3.83

3.62

4.06

5.75

4.26

3.98

4.85

3.77

2.86

1.75

3.95

2.97

In 2013, Vinnytsya dropped to 16th position in the national report, a trend since 2011. The Oblast’s competitiveness index is 3.97 points, 0.07 points below Ukraine’s score in WEF’s Global Competitiveness Index. Vinnytsya’s aggregate score corresponds to 90th place in the GCI, nearly matching that of Moldova and Greece. The Oblast’s performance across all dimensions of three sub-indices is moderate both in regional and international comparison: 17th in Ukraine and 85th in the world in basic requirements, 17th and 98th in efficiency enhancers and 19th and 71st in innovation and sophistication factors. Compared with 2012, Vinnytsya has boosted its scores for nine out of twelve competitiveness pillars, excluding health and primary education as well as labour market efficiency. The Oblast maintains its strength in institutions, labor market efficiency and innovations, whilst continuing Figure 5.23

to face larger challenges in higher education and training, infrastructure and health and primary education. Vinnytsya sees the biggest drop in health and primary education (down 0.32 points), labour market efficiency (down 0.14) and a slight improvement in financial market development (up 0.12), institutions (up 0.11) and market size (up 0.11). The Oblast keeps on strengthening its footing on the institutions pillar, taking 2nd place in Ukrainian National Competitiveness Report. This corresponds to 65th position in the global ranking, a little behind Poland, Lithuania and Georgia. Such high position reflects primarily the Oblast’s solid performance in government efficiency: low wastefulness of government spending (4th nationally and 23rd globally), high public trust of politicians (2nd and 74th) and security (4th and 49th). At the same time, efficiency of legal framework in challenging regulations

Vinnytsya’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.97

Institutions

3.99

Infrastructure

3.71

Macroeconomic environment

4.20

Health and primary education

5.68

Higher education and training

4.32

Goods market efficiency

4.12

Labor market efficiency

4.71

Financial market development

4.11

Technological readiness

3.07

Market size

2.05

Business sophistication

3.96

Innovation

3.05 1

Vinnytsya Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

was mentioned by 18% of respondents which is more than on average in Ukraine and twice as often as in Sumy and Chernivtsi oblasts. Local and national government instability, inadequately educated workforce, inadequate supply of infrastructure and poor access to financing are less pressing in Vinnytsya. Vinnytsya Oblast ranks 11th among 27 regions of Ukraine by population (3.6%) and 12th by share in Ukraine’s GDP (2.2%). The gross regional product per capita is UAH 17,768 or 62.4% of the national average.

CHAPTER 5. Ukrainian regions’ results

(14th nationally and 99th globally) and irregular payments and bribes (13th and 66th) hampers Vinnytsya’s competitiveness. The Oblast ranks 7th on labour market efficiency, which corresponds to a high 31st position in the GCI, a little below Latvia but above Azerbaijan. The result is based on high scores for female labour force (4th in the national ranking and 24th in the GCI) and for pay and productivity (11th). The capacity to retain talent (109th globally) and the capacity to attract talent (121st) are the weakest indicators in the pillar. Innovations in Vinnytsya are ranked relatively high at 12th place; however the result matches a low 92nd position in the global ranking below Russia, Kazakhstan and CEE countries. Compared with other Oblasts, the oblast performs well in the capacity for innovation (11th nationally and 35th globally) and government procurement of advanced technology products (4th and 77th). Low company spending on R&D (22nd and 119th) and availability of scientists and engineers (18th and 125th) constrain development of innovations in Vinnytsya. Also, the Oblast has few PCT patent applications (18th and 73rd). Higher education and training (23rd in the national ranking and 63rd in the GCI) is the weakest area in Vinnytsya, with the scores above those of Turkey and Bulgaria and below Russia and Kazakhstan. In the national ranking, the Oblast has a low secondary education enrollment rate (22nd) and tertiary education enrollment rate (22nd), though the results correspond to 57th and 58th position in the GCI. Quality of management schools in Vinnytsya is ranked 21st, matching 136th place globally. Nevertheless, the Oblast receives fair assessment for availability of research and training services (11th in Ukraine and 43rd in the world) and extent of staff training (6th nationally but only 132nd globally). Vinnytsya scores are low for health and primary education (18th in the national ranking and 76th in the global ranking), at the same level as Chile but slightly below Russia. This is primarily down to high business impact of HIV/AIDS (27th and 89th), low quality of primary education (20th and 73rd) and primary education enrollment rate (20th and 91st). The Oblast traditionally performs badly on the infrastructure pillar, taking 16th place in Ukraine and 82nd in the world, trailing Poland and Bulgaria. Transport infrastructure does not contribute to the Oblast’s competitiveness either; by the quality of port infrastructure it ranks at the bottom of the GCI (147th and 14th nationally) and rarely has any available seat kilometers. Despite low scores for the quality of railroad infrastructure (17th), the Oblast and Ukraine in general rank highly in the Global Competitiveness Index (19th), considerably outperforming all CEE and CIS countries. Compared with other Ukrainian Oblasts, Vinnytsya has good quality roads (8th and 81st). Similarly to the average perception across Ukraine, policy instability tops the list of the most problematic factors for doing business, with 19% of respondents citing this. In contrast to Ukraine’s average, Vinnytsya businessmen see corruption (13.4%) as the second concern, while tax regulations that led the ranking last year now take only the third place (12%). Local managers are more anxious about tax rates than their Ukrainian peers on average. Corruption

113

CHAPTER 5. Ukrainian regions’ results

Volyn

Rank 17

Dynamics of Competitiveness Index, score

zzThe Oblast receives its best scores for institutions, goods market

efficiency and technological readiness zzThree years in a row Volyn loses out to other Oblasts on higher

3.87

education and training, infrastructure and market size pillars

3.99

3.97

2012

2013

zzPolicy instability, tax regulations and tax rates dominate the most

problematic factors for doing business in this Oblast

2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

114

2013

3.95

3.61

4.20

5.83

4.30

4.19

4.68

4.17

3.14

1.90

3.92

2.94

2012

4.04

3.55

4.52

5.86

4.33

4.07

4.82

4.17

3.04

1.83

3.87

2.90

2011

4.01

3.45

4.00

5.82

4.41

3.93

4.79

4.08

2.88

1.51

3.88

2.94

In 2013, Volyn has lost six positions to take 17th place in Ukrainian National Competitiveness Report. Its overall competitiveness index has dropped 0.02 points to 3.97 year on year. For the past year Volyn has deteriorated in all three competitiveness sub-indices. Basic requirements see the biggest dip (18th, down 8 places). In efficiency enhancers and innovation and sophistication factors, Volyn ranks 16th and 19th, losing six and three positions respectively. The Oblast has better scores for six pillars, with goods market efficiency (up 0.12), technological readiness (up 0.1) and market size (up 0.07) seeing the largest progress. Pillars with the largest downturns are labour market efficiency (down 0.14) and institutions (down 0.09). Despite the largest annual drop against other Oblasts, the labour market efficiency still belongs to Volyn’s relative Figure 5.24

competitive advantages in international comparison (31st). The Oblast receives its highest scores for goods market efficiency (4th, down 2 places), institutions (5th, down 4) and technological readiness (7th, up 5) but ranks outside the top 20 on infrastructure. Lower positions in financial market development (8th, 1st last year) and higher education and training (24th, 20th last year) also give cause for concern. Volyn’s leadership in institutions stems from its ranking in the top 5 in Ukraine across ten dimensions of the pillar. The Oblast leads by intellectual property protection (2nd nationally, 87th globally), low favoritism in decisions of government officials (1st, 42nd), wastefulness of government spending (1st, 18th) and organized crime (2nd, 59th) but is almost incapable of competing by ethical behavior of firms (27th, 125th).

Volyn’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.97

Institutions

3.95

Infrastructure

3.61

Macroeconomic environment

4.20

Health and primary education

5.83

Higher education and training

4.30

Goods market efficiency

4.19

Labor market efficiency

4.68

Financial market development

4.17

Technological readiness

3.14

Market size

1.90

Business sophistication

3.92

Innovation

2.94 1

Volyn Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Volyn Oblast ranks 24st among 27 regions of Ukraine by population (2.3%) and by share in the national GDP (1.4%). The gross regional product per capita is UAH 16,993 or 59.6% of the Ukrainian average.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

On the goods market efficiency pillar, Volyn has dropped two places to achieve a respectable 4th place which corresponds to 87th position in the world or at the level of such countries as Bulgaria and Hungary. Business executives believe the Oblast has a strong footing in business impact of rules on FDI (2nd nationally and 78th globally), burden of customs procedures (3rd and 52nd), higher imports as a percentage of GDP (6th and 77th) and buyer sophistication (6th and 37th). At the same time the extent of market dominance (20th and 64th), prevalence of trade barriers (25th and 114th) and degree of customer orientation (27th and 58th) remain challenges for the Oblast. Volyn ranks 7th in Ukraine on technological readiness, which is comparable with 102nd position in the competitiveness index of the 148 nations. The Oblast has climbed 5 places, with competitive advantages nationally in FDI and technology transfer (5th and 95th). The most problematic areas for the Oblast in the pillar continue to be fixed telephone lines (23rd nationally and 72nd globally). Volyn ranks 21st in the national report on infrastructure, which corresponds to the 88th position in the GCI. The Oblastâ&#x20AC;&#x2122;s largest issues are with the quality of air transport infrastructure (26th nationally and 148th globally), fixed telephone lines (23nd and 72nd) and the quality of overall infrastructure (19th and 75th). As benchmarked against global economies, the quality of railroad infrastructure remains the only competitive advantage of Volyn (12th nationally, 17th globally). Volyn is placed at the bottom on the higher education and training pillar (24th nationally and 65th globally). The Oblast delivers the weakest performance in the quality of management schools (24th and 139th), tertiary education enrollment rate (23rd and 63rd) and availability of research and training services (23rd and 61st). Although these scores are low in the global comparison, the Oblast is still competitive in the quality of maths and science education (8th nationally and 50th globally) and secondary education enrollment rate (10th and 49th). Top three problematic factors for doing business have remained the same as last year: tax regulations (13.6%), policy instability (14.3%) and tax rates (11.7%). Yet in contrast to 2012, the policy instability tops the list now. As in the previous year, local businessmen see the tax rates as a largest problem over corruption, unlike their peers across the country. Volyn business executives are more concerned with inefficient government bureaucracy, access to financing, inadequate supply of infrastructure and regional customs policy than Ukraineâ&#x20AC;&#x2122;s average score. Still, they look at local and national government instability, inadequately educated workforce, access to land plots and restrictive labour regulations as less worrying issues.

115

CHAPTER 5. Ukrainian regions’ results

Zakarpattya

Rank 20

Dynamics of Competitiveness Index, score

zzOver the last year the competitiveness index of Zakarpattya Oblast has

slightly changed; the Oblast loses three positions in the national ranking. Health and primary education and institutions remain the strengths of Zakarpattya Oblast, compared with other Ukrainian regions zzAt the same time Zakarpattya Oblast lags significantly behind the

3.95

3.96

2012

2013

3.80

leading Oblasts in infrastructure, higher education and training, business sophistication and innovation zzPolicy instability and tax regulations are perceived as the biggest

obstacles to doing business in Zakarpattya Oblast, as well as in Ukraine in general. Tax rates rank 3rd in the list 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

116

2013

3.95

3.59

4.20

5.93

4.15

4.18

4.61

4.15

3.14

2.05

3.80

2.84

2012

3.97

3.55

4.52

5.94

4.13

4.06

4.70

3.97

2.99

2.01

3.71

2.81

2011

3.84

3.56

4.06

5.94

4.07

4.02

4.72

3.66

2.75

1.65

3.65

2.75

In 2013, Zakarpattya Oblast loses 3 positions in the Ukrainian National Competitiveness Index, placing 20th. The Oblast retains almost the same score as last year, which is below Ukraine’s average in the national and global rankings. The aggregate score of Zakarpattya Oblast is 3.96 scores, which corresponds to 89th position in the global ranking (Moldova). Compared with CIS countries, Zakarpattya Oblast is only ahead of Kyrgyzstan. The Oblast performs well in the dimensions of basic requirements (83rd globally), which are important for economies on the first stage of development. Zakarpattya Oblast ranks a low 100th place globally in the other two sub-indices. In the innovations and sophistication factors the Oblast scores at the level of Russia, slightly less than Bulgaria but better than that of Georgia. Figure 5.25

Over the last year Zakarpattya Oblast has improved its performance in 8 out of 12 pillars of competitiveness. The major improvement refers to financial market development (a gain of 0.18 scores), technological readiness (up 0.14 scores) and goods market efficiency (up 0.12 scores). However, in the global ranking the Oblast has only improved its position in financial market development (62nd place). The most significant drop is in labour market efficiency (a loss of 0.09 points). However, it is globally still seen as one of relative competitive advantages of Zakarpattya Oblast (37th place). Zakarpattya Oblast is among the top three Ukrainian regions in health and primary education and institutions (both 3rd place). The Oblast benefits from outstanding health and primary education system. It ranks a high 3rd place in the national ranking and 53rd globally (Saudi Arabia). It

Zakarpattya’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.96

Institutions

3.95

Infrastructure

3.59

Macroeconomic environment

4.20

Health and primary education

5.93

Higher education and training

4.15

Goods market efficiency

4.18

Labor market efficiency

4.61

Financial market development

4.15

Technological readiness

3.14

Market size

2.05

Business sophistication

3.80

Innovation

2.84 1

Zakarpattya Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

countries, its innovations pillar ranks 113th, at the same level as Burkina-Faso, Serbia and Benin. Despite a relatively high innovation potential (40th globally) its low overall performance in this pillar is the result of low quality scientific research institutions (115th globally), lack of scientists and engineers (119th) and low company spending on R&D (at a rock bottom 27th place in the national ranking and 131st globally). Business executives of Zakarpattya Oblast single out policy instability as the major obstacle to doing business in the Oblast (the same as in Ukraine in general). This opinion is shared by 17% of respondents in the Oblast. Tax regulations occupy the second line in the list (13.8%). In contrast to average results of Ukraine, the third most problematic factor for doing business in the Oblast is tax rates with the result of 9.6% of responses. Zakarpattya Oblast is more than other Ukrainian regions concerned with inadequate supply of infrastructure, inflation and regional customs policy. At the same time the problems of access to financing and crime and theft are less of a priority for the Oblast.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

performs better than all CIS countries and a number of countries from Eastern Europe. Zakarpattya Oblast could have shown even better results but for low scores in tuberculosis incidence and business impact of tuberculosis in the Oblast. The Oblast has a relatively low life expectancy of 70.95 years (14th nationally and 94th globally). Good overall performance in the pillar results from absence of malaria cases (in the Oblast and in Ukraine in general) and very low HIV prevalence. The Oblast can boast its relatively efficient institutional framework (3rd place nationally). However, with a score of 3.95 points out of 7 it ranks only 68th in the global ranking. Businessmen of Zakarpattya Oblast are satisfied with protection of property rights (ranks a high 46th place in the global ranking). It shows relatively good scores in sub-pillars such as diversion of public funds (50th globally), wastefulness of government spending (33rd place) and transparency of government policymaking (18th place). At the same time it significantly lags behind other economies in judicial independence and efficiency of legal framework in settling disputes. Business executives also complain about the poor performance of private institutions; in particular they refer to the weakness in the strength of auditing and reporting standards, strength of investor protection and protection of minority shareholdersâ&#x20AC;&#x2122; interests. The Oblast is near the bottom of the global ranking in all these indicators. Zakarpattya Oblast ranks 17th nationally in labour market efficiency; this is the dimension where almost all Ukrainian regions show good performance. For this reason, Zakarpattya Oblast ranks a high 37th place in the global ranking, at the same level as China, the Republic of Cyprus and Madagascar. It shows good performance first of all due to flexible employee/employer relations: high cooperation in labour-employer relations (28th) and good hiring and firing practices (25th place At the same time the Oblast shows poor ability to use talents; reliance on professional management (25th nationally and 88th globally), in addition to capacity to retain and attract talents from other regions and countries (128th and 116th respectively). Zakarpattya Oblast continues to suffer from poor infrastructure (22nd nationally and 88th globally). The major areas of concern include quality of air transport infrastructure (141st globally) and available airline seat (at the very bottom of the global ranking). Like all other Ukrainian regions Zakarpattya Oblast also suffers from poor quality of roads (99th globally). Its strengths in the global ranking include the quality of railroad infrastructure (a high 17th place) and mobile telephone subscriptions (46th place). Zakarpattya Oblast ranks second to last among the 27 regions in higher education and training. This corresponds to 79th place in the global ranking (36 positions behind Ukraine and 32 positions behind Russia). The overall competitiveness of the Oblasts continues to be hampered by low tertiary education enrolment (27th nationally and 82nd globally) and poor quality of management schools (136th out of all 148 economies). The Oblast is in the bottom half of the ranking in secondary education enrolment and Internet access at schools. Zakarpattya Oblast retains low scores in business sophistication and innovations (26th and 24th in the national ranking respectively). Compared with 148

Zakarpattya Oblast ranks 17th among 27 regions of Ukraine by population (2.8%) and 23rd by share in Ukraine GDP (1.4%). The gross regional product of the oblast per capita is UAH 14,455 or 50.7% of Ukraineâ&#x20AC;&#x2122;s average. 117

CHAPTER 5. Ukrainian regions’ results

Zaporizhzhya

Rank 8

Dynamics of Competitiveness Index, score

zzZaporizhzhya receives the highest scores for higher education

and training, business sophistication and infrastructure 3.98

zzThe Oblast falls behind other Oblasts in health and primary

4.07

4.03

2012

2013

education, technological readiness and labour market efficiency zzTax regulations, policy instability and tax rates are the most

problematic factors for doing business in the region

2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

118

2013

3.74

4.09

4.20

5.61

4.89

4.06

4.57

4.17

2.90

2.37

4.02

3.00

2012

3.75

4.03

4.52

5.72

4.79

3.98

4.82

4.09

3.00

2.32

4.06

3.04

2011

3.68

3.95

4.15

5.79

4.75

3.88

4.77

3.97

2.95

2.17

4.04

2.98

Compared with last year, Zaporizhzhya has lost one place in the national report to taking 8th position amongst the 27 regions in Ukraine. Its aggregate score (4.03) is 0.02 points above the national average and corresponds to the 87th place globally. The Oblast has performed worse in all three subindices, with the biggest drop in basic requirements (down 7 places to 15th in the national report). Zaporizhzhya has lost one position in efficiency enhancers (down to 8th) and 4 places in innovation and sophistication factors (down to 10th). The Oblast achieves the best results in higher education and training (4th nationally, 37th globally), business sophistication (6th and 67th) and infrastructure (8th and 68th). Health and primary education (24th, down from 17th in 2012), technological readiness (24th, down Figure 5.26

from 15th in 2012) and goods market efficiency (23rd, down from 11th in 2012) remain the weakest pillars for Zaporizhzhya. A high place in higher education and training (4th) reflects the Oblast’s high performance. Zaporizhzhya ranks 4th in the national report (10th globally) by tertiary education enrollment rate and 8th (42nd globally) by secondary education enrolment rate. The Oblast is in top 10 by Internet access in schools (9th nationally, 49th globally) and ranks 7th by local availability of specialized research and training services (35th globally). However, the quality of maths and science education (23rd nationally, 70th globally) and the quality of the educational system (20th and 61st) demonstrate poor performance. Zaporizhzhya takes the 6th place on business sophistication pillar, a two position fall year on year.

Zaporizhzhya’s perfomance by 12 pillars of competitiveness Competitiveness Index

4.03

Institutions

3.74

Infrastructure

4.09

Macroeconomic environment

4.20

Health and primary education

5.61

Higher education and training

4.89

Goods market efficiency

4.06

Labor market efficiency

4.57

Financial market development

4.17

Technological readiness

2.90

Market size

2.37

Business sophistication

4.02

Innovation

3.00 1

Zaporizhzhya Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

Zaporizhzhya Oblast ranks 9th among 27 regions of Ukraine by population (3.9%) and 10th by share in Ukraineâ&#x20AC;&#x2122;s GDP (3.8%). The gross regional product is UAH 27,657 or 96.8% of the Ukrainian average.

CHAPTER 5. Ukrainian regionsâ&#x20AC;&#x2122; results

Business executives give high scores to the value chain breadth (2nd nationally, 70th globally), reliance on professional management (5th and 65th) and the state of cluster development (8th and 34th). The performance in the latter indicator gives a competitive advantage to Zaporizhzhya even on the global scale. On the other hand, the Oblast is outside top 20 of Ukrainian Oblasts in terms of production process sophistication (23rd, down 1 place) and control of international distribution (21st, down 4 places). Zaporizhzhya takes a relatively high 8th position on infrastructure, with high scores in fixed telephone lines (3rd nationally which corresponds to 43rd place globally), available seat kilometers (7th and 148th) and the quality of electricity supply (8th and 70th). At the same time, the quality of railroad infrastructure (16th nationally) and quality of air transport infrastructure (13th nationally) are less competitive in the Oblast. Scores for the latter indicator put the Oblast outside top 100 in the global index. Health and primary education traditionally belongs to the weakest pillars in Zaporizhzhya, firstly because of a low primary education enrollment rate (25th), poor quality of primary education (21st) and tuberculosis incidence (18th). The Oblast also has quite high infant mortality (17th nationally) and low life expectancy (14th) where businesses see extra costs. Zaporizhzhya has fallen 9 places on technological readiness to take a very low 24th place out of 27 regions. The decline is down to poor scores for FDI and technology transfer (27th, the lowest nationally), availability of latest technologies (25th) and mobile telephone subscriptions (21st). The scores for the first two indicators are lower than those of other country listed in the global index. Zaporizhzhya shows relatively fair performance in the number of Internet users and fixed telephone lines (1st and 3rd nationally; 84th and 43rd globally respectively). In 2013, the result of Zaporizhzhya in labour market efficiency has unexpectedly plummeted by 12 places to 23rd position since last year, firstly because of a low flexibility of wage determination (down 13 places, 17th nationally) and pay and productivity (down 1 position, 23rd nationally). The list of top three largest barriers for business in Zaporizhzhya has changed year on year. Tax regulations factor goes up from the second to the first position (16.3%), with policy instability coming in at the second place (14.3%) and corruption (12.6%) in third place. Local business executives are more concerned with tax regulations, tax rates and inadequately educated workforce than their peers across Ukraine. On the other hand, the managers are less worried about access to financing, inflation and inadequate supply of infrastructure.

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CHAPTER 5. Ukrainian regions’ results

Zhytomyr

Rank 25

Dynamics of Competitiveness Index, score

zzThe labour market efficiency is a competitive advantage of the

region zzThe Oblast is the most furthest away from other regions in

infrastructure, technological readiness, market size and innovation

3.76

zzEchoing the average assessment across Ukraine, policy instability

3.87

3.88

2012

2013

and tax regulations are the first two most problematic factors for businesses in Zhytomyr, with tax rates ranking third 2011

Evaluation of dynamics of region’s results by 12 pillars of Competitiveness, score

120

2013

3.84

3.38

4.20

5.64

4.35

4.16

4.72

4.09

2.93

1.90

3.79

2.67

2012

3.78

3.42

4.52

5.62

4.31

3.88

4.83

3.94

2.96

1.80

3.74

2.73

2011

3.73

3.44

3.96

5.65

4.35

3.70

4.79

3.74

2.86

1.60

3.75

2.82

In 2013, Zhytomyr retained its 25th position, with only Kherson and Kirovohrad being lower in ranking. The aggregate score of the Oblast has insignificantly changed (3.88) and is less than the national average and below Ukraine’s score in the global ranking. In 2013, Zhytomyr performed at the same level, 93rd place, as Zambia in the GCI, which is slightly lower than Greece but higher than Albania. All countries in Central Eastern Europe and almost every nation in the CIS have performed better. The region ranks at the bottom of the national ranking in every sub-index except one: efficiency enhancers (20th place out of 27). Nonetheless, it is at the level of 99th position among 148 nations. Compared with 2012, Zhytomyr has improved its scores in seven out of twelve pillars, with the most impressive progress in goods market efficiency (plus 0.27 Figure 5.27

scores) and financial market development (plus 0.15 scores). This growth has helped the Oblast to improve its positions in those pillars compared with other nations, but it is too early though to talk about competitive advantages. The labour market efficiency in Zhytomyr has seen the largest drop (minus 0.11 scores) but the Oblast still has a competitive advantage in the global index (30th place). The region is in the top 5 of the national report for labour market efficiency – this is the only relative competitive advantage Zhytomyr has both nationally and internationally. This performance corresponds to a high 30th place in the global index which is the same level as Azerbaijan. Only Kazakhstan, Estonia and Latvia receive better scores in the CEE and CIS, while Germany, France and Russia performance is worse. Business executives think the region has a strong footing in pay and productivity (among

Zhytomyr’s perfomance by 12 pillars of competitiveness Competitiveness Index

3.88

Institutions

3.84

Infrastructure

3.38

Macroeconomic environment

4.20

Health and primary education

5.64

Higher education and training

4.35

Goods market efficiency

4.16

Labor market efficiency

4.72

Financial market development

4.09

Technological readiness

2.93

Market size

1.90

Business sophistication

3.79

Innovation

2.67 1

Zhytomyr Regions average Best region

4.40 4.00 5.12 4.20

5.97 5.28 4.26 4.80 4.26 4.38 3.71 4.25 3.60 7

third position on the list of the most problematic factors for doing business (11.2%). Local businesses are more concerned with inflation than their peers across Ukraine but give less priority to the regional customs policy. Zhytomyr Oblast ranks 16th among 27 regions of Ukraine by population (2.8%) and 18th by share in the national GDP (1.7%). The gross regional product per capita is UAH 17,184 or 60.3% of the Ukrainian average.

CHAPTER 5. Ukrainian regions’ results

the top performers in the world) and one of Ukraine’s best ratios of men/women in labour force and Zhytomyr ranks 5th (25th globally). Local businessmen provide efficient cooperation in labour-employer relations (28th globally) However at the same time, the region is unable to maintain a good performance in retaining and attracting new talent (129th and 128th places globally). Zhytomyr has a reasonable result (11th place) in institutions in Ukraine, which corresponds to 74th position globally, the same as South Korea and above Hungary, Czech Republic, Romania and Russia. The Oblast has a low diversion of public funds (50th place globally), wastefulness of government spending (30th place) and transparency of government policymaking (41st place). Also, local businesses believe that business costs of terrorism are low (12th place). However at the same time, judicial independence and efficiency of legal framework in settling disputes remain a challenge in this Oblast (outside the top 100 of the global index). Corporate executives in Zhytomyr give a low score to ethical behaviour of firms (16th nationally and 112th place globally which is the level as Pakistan and Greece). The loss of two positions resulting in the Oblast being in second to last position on the infrastructure pillar in the national report signals a negative trend as the Oblast has been losing ground over the past years to the other Oblasts, while most of the other oblasts have been improving. Zhytomyr performs worse in nearly all dimensions of this pillar, with the lowest scores for the quality of roads (102nd place globally), quality of air transport infrastructure and available seat kilometers (behind all countries in the global index in both indicators). The quality of electricity supply is the worst in Ukraine, at the level of 82nd position in the world. The quality of railroad infrastructure still has competitive advantages for this Oblast (28th place), although the Oblast has lost 11 positions over the past three years. Zhytomyr ranks 22nd place in the national report on technological readiness, which is 117th overall in the competitiveness index of 148 nations. The Oblast faces its greatest challenges in the: availability of latest technologies (21st place nationally, 144th pace globally) and FDI and technology transfer (at the level of 126th place). The Oblast also has low scores in firm-level technology absorption and the number of Internet users. Zhytomyr has lost nine positions over the past two years on the innovation pillar, resulting in the Oblast being at the very bottom of the national ranking in 128th position in the global index, the same as Georgia, Zimbabwe and Mozambique. The Oblast performs the worst in Ukraine for the quality of scientific research institutions and availability of scientists and engineers – in both indicators the Oblast ranks in last 10 in the global index. University-industry collaboration in R&D, company spending on R&D and government procurement of advanced technology products also receive low scores. Businesses look at the capacity for innovation as the only relative competitive advantage (43rd place globally). Echoing the average assessment across Ukraine, senior executives (16.2%) in Zhytomyr believe that policy instability is the most significant problem for business, traditionally followed by tax regulations (14.5%). In contrast to the average results in Ukraine, tax rates take the

121

Competitiveness Profiles

Key indicators Population (m), 2012................................................................................1.97 Gross Regional Product (UAH m), 2011...............................................38,220 GRP per capita (UAH), 2011.................................................................19,467 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................2.9

Competitiveness Profiles

AR Crimea

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013......................................................................................11.........4.00 Basic requirements............................................................................................................. 6......... 4.47 Institutions.......................................................................................25......3.68 Infrastructure.....................................................................................5......4.26 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................12......5.75 Efficiency enhancers....................................................................................................... 18.........3.72 Higher education and training..........................................................22......4.32 Goods market efficiency .................................................................15......4.09 Labor market efficiency...................................................................26......4.47 Financial market development.........................................................17......4.10 Technological readiness...................................................................14......3.05 Market size......................................................................................11......2.31

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors..................................................................11.........3.51 Business sophistication ....................................................................5......4.05 Innovation........................................................................................16......2.97 AR Crimea

125

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % AR Crimea

Regions average

Inefficient government bureaucracy........................................................ 12.5%..................9.9% Policy instability...................................................................................... 12.3%................16.9% Tax regulations........................................................................................ 11.6%................13.8% Corruption............................................................................................... 11.0%................11.3% Tax rates................................................................................................. 10.7%................10.0% Inflation..................................................................................................... 8.2%..................6.5% Local and national government instability................................................ 7.3%..................6.8% Access to financing................................................................................... 7.2%..................6.5% Inadequate supply of infrastructure.......................................................... 4.8%..................4.1% Inadequately educated workforce............................................................. 4.4%..................4.8% Access to land plots ................................................................................. 4.1%..................2.4% Restrictive labour regulations................................................................... 2.3%..................2.1% Crime and theft......................................................................................... 1.4%..................1.3% Foreign currency regulations.................................................................... 1.3%..................1.6% Regional customs policy........................................................................... 0.9%..................2.0%

AR Crimea

10%

15%

20%

Regions average

Source: Foundation for Effective Governance, Executive Opinion Survey 2012 Note: From a list of 15 factors, respondents were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5. The figure shows the responses weighted according to their ratings 2012â&#x20AC;&#x201C;2013.

Competitiveness Profiles 126

AR Crimea Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................11.......................4.00...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 6........................4.47...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................18......................3.72...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................11.......................3.51...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................25......................3.68...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 14................4.50.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 18................3.20.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 22................3.42.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 23................2.40.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 21................3.86.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 17................2.83.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 24................2.72.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 15................3.87.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 25................2.94.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 25................2.88.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 21................3.00.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 26................4.54.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 27................5.97.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 27................4.50.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 15................5.03.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 18................4.00.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 23................3.41.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 27................4.77.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 8.................3.65.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 5........................4.26...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 14................4.40.........................-.......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 6.................3.85.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 10................4.95.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 3.................4.86.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 4.................4.58.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 4.................1.01.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 23................4.46.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 4...............144.16.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 14...............21.39........................-......................24.21........ 67.97 Odesa

A.03

3rd pillar: Macroeconomic environment............................................................................................. 1........................4.20...................................=................................4.20.................4.20 Multiple (27)

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................12......................5.75...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 14................4.41.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 21...............76.60........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 5.................5.56.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 22................0.68.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 18................8.90.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 17...............70.84........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 19................3.90.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 12...............94.70........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................22......................4.32...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 7................99.20........................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 24...............42.36........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 25................3.79.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 19................4.19.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 27................2.75.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 23................4.62.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 9.................4.63.........................+......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 13................3.05.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................15......................4.09...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 13................4.55.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 10................4.14.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 15................3.35.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 22................3.14.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 12................3.50.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 19................4.10.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 20................2.75.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 22................3.88.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 24................3.48.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 9................29.69........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 23................4.81.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 9.................3.76.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................26......................4.47...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 10................4.96.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 26................4.94.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 24................4.27.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 25................2.79.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 19................5.00.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 20................4.09.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 10................2.84.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 11................2.69.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 26................0.78.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................17.......................4.10...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 20................4.87.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 21................4.22.........................-.......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 3.................3.03.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 16................2.82.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 16................2.20.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 19................4.81.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 17................3.09.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................14......................3.05...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 16................3.48.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 22................4.13.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 20................3.65.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 12...............30.88........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 9.................6.23.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 4...............144.16.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 14...............21.39........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................11.......................2.31...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 8.................2.14.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 13................2.83.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 5........................4.05...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 23................4.44.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 25................4.00.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 3.................4.62.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 2.................3.99.........................+......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 5.................3.64.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 8.................4.82.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 25................3.16.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 10................4.17.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 18................3.54.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 20................4.09.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................16......................2.97...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 25................3.89.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 11................3.79.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 10................2.90.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 19................2.74.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 21................2.93.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 14................3.41.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 23................0.25.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 18................3.20.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

n/e – data are not available for a region, n/a – data are not applicable for a region, ‘Multiple’ means that more than one region get the maximum score, * statistical data, + better than Ukraine’s average, - worse than Ukraine’s average, = the same for all regions, 1/2 is used in two different pillars

Competitiveness Profiles

AR Crimea

127

Key indicators Population (m), 2012................................................................................1.27 Gross Regional Product (UAH m), 2011...............................................27,012 GRP per capita (UAH), 2011.................................................................21,082 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................2.1

Competitiveness Profiles

Cherkasy

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 18.........3.96 Basic requirements..........................................................................................................20......... 4.37 Institutions.......................................................................................18......3.77 Infrastructure...................................................................................13......3.77 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................13......5.74 Efficiency enhancers....................................................................................................... 13.........3.75 Higher education and training..........................................................13......4.52 Goods market efficiency .................................................................25......4.01 Labor market efficiency...................................................................11......4.64 Financial market development.........................................................12......4.15 Technological readiness.....................................................................8......3.14 Market size......................................................................................15......2.02

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 21......... 3.41 Business sophistication ....................................................................8......3.99 Innovation........................................................................................25......2.82 Cherkasy

129

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Cherkasy

Regions average

Policy instability...................................................................................... 18.4%................16.9% Inefficient government bureaucracy........................................................ 14.9%..................9.9% Tax regulations........................................................................................ 11.6%................13.8% Tax rates................................................................................................... 9.3%................10.0% Local and national government instability................................................ 8.7%..................6.8% Corruption................................................................................................. 8.2%................11.3% Inflation..................................................................................................... 7.3%..................6.5% Inadequately educated workforce............................................................. 5.7%..................4.8% Access to financing................................................................................... 5.3%..................6.5% Inadequate supply of infrastructure.......................................................... 3.6%..................4.1% Foreign currency regulations.................................................................... 1.9%..................1.6% Restrictive labour regulations................................................................... 1.8%..................2.1% Regional customs policy........................................................................... 1.4%..................2.0% Crime and theft......................................................................................... 1.2%..................1.3% Access to land plots ................................................................................. 0.7%..................2.4%

Cherkasy

10%

15%

20%

Regions average

Competitiveness Profiles 130

Cherkasy Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................18......................3.96...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................20......................4.37...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................13......................3.75...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................21......................3.41...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................18......................3.77...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 18................4.43.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 19................3.19.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 19................3.55.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 26................2.25.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 16................4.01.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 20................2.79.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 20................2.89.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 19................3.81.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 12................3.35.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 17................3.02.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 13................3.11.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 20................4.76.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 8.................6.43.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 18................4.65.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 17................4.99.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 14................4.08.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 4.................3.76.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 14................5.08.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 27................2.94.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................13......................3.77...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 18................4.30.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 20................3.00.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 26................4.15.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 13................2.40.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 23................1.63.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 3.................5.17.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 12..............127.44.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 9................23.02........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................13......................5.74...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 24................4.22.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 14...............63.00........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 15................5.37.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 17................0.37.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 25................9.60.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 10...............71.25........................+.....................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 7.................4.04.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 13...............93.40........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................13......................4.52...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 23...............93.00........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 11...............62.22........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 12................4.08.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 14................4.24.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 16................3.19.........................-.......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 2.................5.06.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 18................4.50.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 24................2.92.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................25......................4.01...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 9.................4.69.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 22................3.84.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 24................3.15.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 8.................3.40.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 26................3.11.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 16................4.12.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 22................2.63.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 27................3.66.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 9.................4.03.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 20...............16.33........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 12................4.93.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 23................3.60.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................11.......................4.64...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 21................4.76.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 18................5.10.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 3.................4.64.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 5.................3.31.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 18................5.02.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 19................4.16.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 22................2.51.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 18................2.36.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 9.................0.89.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................12......................4.15...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 14................4.99.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 7.................4.47.........................+......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 9.................2.86.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 21................2.72.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 19................2.18.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 8.................4.93.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 13................3.23.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 8........................3.14...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 9.................3.70.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 13................4.30.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 9.................3.97.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 8................34.45........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 21................4.29.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 12..............127.44.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 9................23.02........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................15......................2.02...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 15................1.78.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 15................2.72.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 8........................3.99...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 10................4.78.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 2.................4.39.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 13................3.84.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 9.................3.60.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 21................3.26.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 4.................4.89.........................+......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 9.................3.57.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 22................3.90.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 15................3.61.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 19................4.16.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................25......................2.82...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 18................3.98.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 20................3.11.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 20................2.68.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 25................2.58.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 15................2.99.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 20................3.20.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 25................0.10.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 19................3.19.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Cherkasy

131

Key indicators Population (m), 2012................................................................................1.08 Gross Regional Product (UAH m), 2011...............................................21,165 GRP per capita (UAH), 2011.................................................................19,357 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.6

Competitiveness Profiles

Chernihiv

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013.....................................................................................23.........3.93 Basic requirements...........................................................................................................11.........4.43 Institutions.......................................................................................10......3.92 Infrastructure...................................................................................11......3.94 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................22......5.63 Efficiency enhancers.......................................................................................................23.........3.66 Higher education and training..........................................................25......4.18 Goods market efficiency .................................................................24......4.03 Labor market efficiency.....................................................................2......4.76 Financial market development.........................................................10......4.16 Technological readiness...................................................................23......2.93 Market size......................................................................................21......1.89

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................26.........3.26 Business sophistication ..................................................................24......3.81 Innovation........................................................................................26......2.72 Chernihiv

133

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Chernihiv

Regions average

Policy instability...................................................................................... 22.5%................16.9% Tax regulations........................................................................................ 12.2%................13.8% Corruption............................................................................................... 11.0%................11.3% Inefficient government bureaucracy........................................................ 10.5%..................9.9% Inadequately educated workforce............................................................. 7.3%..................4.8% Tax rates................................................................................................... 7.1%................10.0% Inadequate supply of infrastructure.......................................................... 6.4%..................4.1% Access to financing................................................................................... 6.3%..................6.5% Local and national government instability................................................ 4.8%..................6.8% Inflation..................................................................................................... 4.7%..................6.5% Access to land plots ................................................................................. 2.5%..................2.4% Regional customs policy........................................................................... 1.5%..................2.0% Restrictive labour regulations................................................................... 1.3%..................2.1% Foreign currency regulations.................................................................... 1.2%..................1.6% Crime and theft......................................................................................... 0.9%..................1.3%

Chernihiv

10%

15%

20%

Regions average

Competitiveness Profiles 134

Chernihiv Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................23......................3.93...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................11.......................4.43...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................23......................3.66...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................26......................3.26...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................10......................3.92...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 7.................4.58.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 26................3.01.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 2.................4.10.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 15................2.51.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 1.................4.46.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 1.................3.28.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 2.................3.43.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 23................3.76.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 14................3.23.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 10................3.13.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 11................3.13.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 17................4.81.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 4.................6.56.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 11................4.79.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 10................5.19.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 11................4.15.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 21................3.48.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 25................4.89.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 3.................3.75.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................11.......................3.94...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 27................3.99.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 19................3.08.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 14................4.89.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 17................2.07.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 25................1.50.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 6.................5.07.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 2...............151.47.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 7................25.90........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................22......................5.63...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 10................4.48.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 13...............62.80........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 20................5.27.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 19................0.47.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 22................9.10.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 18...............70.57........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 26................3.67.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 15...............93.20........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................25......................4.18...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 13...............95.30........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 20...............45.48........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 26................3.74.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 26................4.05.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 26................2.80.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 18................4.69.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 27................4.00.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 17................3.03.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................24......................4.03...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 27................4.10.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 9.................4.15.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 26................3.15.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 1.................3.78.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 24................3.19.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 5.................4.47.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 26................2.36.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 18................4.04.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 23................3.58.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 17...............19.68........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 18................4.87.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 19................3.61.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 2........................4.76...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 16................4.83.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 4.................5.36.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 26................4.22.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 1.................3.51.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 2.................5.40.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 7.................4.30.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 17................2.60.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 23................2.20.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 2.................0.94.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................10......................4.16...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 16................4.94.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 5.................4.53.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 21................2.64.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 7.................2.92.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 14................2.21.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 2.................5.14.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 19................3.07.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................23......................2.93...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 27................3.06.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 21................4.16.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 24................3.41.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 27...............20.13........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 8.................6.55.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 2...............151.47.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 7................25.90........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................21......................1.89...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 18................1.73.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 22................2.35.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................24......................3.81...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 27................4.32.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 18................4.16.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 27................3.03.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 5.................3.72.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 19................3.30.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 7.................4.83.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 24................3.21.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 26................3.74.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 9.................3.72.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 7.................4.30.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................26......................2.72...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 26................3.76.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 24................2.99.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 11................2.86.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 27................2.33.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 11................3.02.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 26................2.92.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 20................0.68.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 26................3.01.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Chernihiv

135

Key indicators Population (m), 2012................................................................................0.91 Gross Regional Product (UAH m), 2011...............................................11,969 GRP per capita (UAH), 2011.................................................................13,228 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................0.9

Competitiveness Profiles

Chernivtsi

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013.....................................................................................22.........3.95 Basic requirements.............................................................................................................8.........4.44 Institutions.........................................................................................6......3.95 Infrastructure...................................................................................18......3.66 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................2......5.96 Efficiency enhancers....................................................................................................... 24.........3.64 Higher education and training..........................................................15......4.49 Goods market efficiency ...................................................................3......4.21 Labor market efficiency...................................................................15......4.63 Financial market development.........................................................18......4.09 Technological readiness...................................................................17......2.99 Market size......................................................................................26......1.41

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 7.........3.55 Business sophistication ..................................................................10......3.99 Innovation..........................................................................................8......3.12 Chernivtsi

137

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Chernivtsi

Regions average

Policy instability...................................................................................... 16.1%................16.9% Tax regulations........................................................................................ 12.5%................13.8% Local and national government instability.............................................. 11.2%..................6.8% Access to financing................................................................................. 10.9%..................6.5% Tax rates................................................................................................... 9.1%................10.0% Inflation..................................................................................................... 7.6%..................6.5% Inadequately educated workforce............................................................. 7.1%..................4.8% Inadequate supply of infrastructure.......................................................... 7.1%..................4.1% Corruption................................................................................................. 6.5%................11.3% Inefficient government bureaucracy.......................................................... 6.5%..................9.9% Foreign currency regulations.................................................................... 2.2%..................1.6% Access to land plots ................................................................................. 2.0%..................2.4% Restrictive labour regulations................................................................... 0.9%..................2.1% Crime and theft......................................................................................... 0.4%..................1.3% Regional customs policy........................................................................... 0.0%..................2.0%

Chernivtsi

10%

15%

20%

Regions average

Competitiveness Profiles 138

Chernivtsi Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................22......................3.95...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 8........................4.44...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................24......................3.64...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 7........................3.55...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 6........................3.95...................................+................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 22................4.39.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 25................3.04.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 8.................3.86.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 3.................2.76.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 7.................4.19.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 6.................3.14.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 5.................3.35.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 14................3.87.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 1.................3.94.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 4.................3.28.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 1.................3.47.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 19................4.76.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 5.................6.55.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 4.................5.02.........................+......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 7.................5.28.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 4.................4.43.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 9.................3.67.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 26................4.78.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 14................3.43.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................18......................3.66...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 12................4.42.........................+......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 26................2.76.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 24................4.44.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 26................1.70.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 10................3.54.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 24................4.34.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 8...............132.28.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 16...............20.72........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 2........................5.96...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 9.................4.48.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 2................48.50........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 10................5.52.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 3.................0.12.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 12................8.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 5................72.97........................+.....................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 1.................4.37.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 7................95.80........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................15......................4.49...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 25...............92.90........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 17...............50.99........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 3.................4.41.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 1.................4.76.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 6.................3.36.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 22................4.63.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 10................4.63.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 9.................3.16.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 3........................4.21...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 25................4.30.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 7.................4.21.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 2.................3.86.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 4.................3.65.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 8.................3.56.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 13................4.19.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 15................2.82.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 4.................4.34.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 1.................4.43.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 26...............10.91........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 1.................5.42.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 18................3.62.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................15......................4.63...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 8.................5.00.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 12................5.19.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 12................4.48.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 2.................3.39.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 7.................5.21.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 27................3.81.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 15................2.65.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 16................2.47.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 17................0.84.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................18......................4.09...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 26................4.75.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 17................4.37.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 24................2.60.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 13................2.86.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 8.................2.32.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 7.................4.94.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 18................3.07.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................17.......................2.99...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 19................3.46.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 19................4.20.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 14................3.82.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 25...............23.40........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 13................5.90.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 8...............132.28.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 16...............20.72........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................26......................1.41...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 26................1.36.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 27................1.54.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................10......................3.99...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 11................4.75.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 14................4.17.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 23................3.43.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 17................3.40.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 10................3.56.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 3.................4.89.........................+......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 3.................3.73.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 5.................4.27.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 5.................3.77.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 27................3.81.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 8........................3.12...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 13................4.05.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 6.................4.23.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 14................2.84.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 16................2.96.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 14................3.00.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 8.................3.77.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 10................1.35.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 25................3.04.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Chernivtsi

139

Key indicators Population (m), 2012................................................................................3.31 Gross Regional Product (UAH m), 2011.............................................140,020 GRP per capita (UAH), 2011.................................................................42,068 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011............................................................10.8

Competitiveness Profiles

Dnipropetrovsk

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 5......... 4.15 Basic requirements.......................................................................................................... 16......... 4.41 Institutions.......................................................................................23......3.70 Infrastructure.....................................................................................7......4.11 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................26......5.60 Efficiency enhancers..........................................................................................................3.........4.01 Higher education and training............................................................5......4.88 Goods market efficiency .................................................................17......4.09 Labor market efficiency...................................................................16......4.61 Financial market development...........................................................6......4.19 Technological readiness.....................................................................5......3.18 Market size........................................................................................2......3.13

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors....................................................................3......... 3.76 Business sophistication ....................................................................3......4.13 Innovation..........................................................................................3......3.40 Dnipropetrovsk

141

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Dnipropetrovsk

Regions average

Policy instability...................................................................................... 17.3%................16.9% Tax regulations........................................................................................ 13.9%................13.8% Corruption............................................................................................... 13.8%................11.3% Tax rates................................................................................................. 10.4%................10.0% Inefficient government bureaucracy.......................................................... 9.2%..................9.9% Local and national government instability................................................ 6.9%..................6.8% Access to financing................................................................................... 6.6%..................6.5% Inflation..................................................................................................... 5.5%..................6.5% Inadequately educated workforce............................................................. 4.2%..................4.8% Inadequate supply of infrastructure.......................................................... 3.1%..................4.1% Regional customs policy........................................................................... 2.7%..................2.0% Restrictive labour regulations................................................................... 2.0%..................2.1% Crime and theft......................................................................................... 1.7%..................1.3% Access to land plots ................................................................................. 1.4%..................2.4% Foreign currency regulations.................................................................... 1.4%..................1.6%

Dnipropetrovsk

10%

15%

20%

Regions average

Competitiveness Profiles 142

Dnipropetrovsk Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 5........................4.15...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................16......................4.41...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 3........................4.01...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 3........................3.76...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................23......................3.70...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 15................4.46.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 20................3.19.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 26................3.09.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 19................2.47.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 25................3.69.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 26................2.64.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 22................2.77.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 20................3.81.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 22................3.04.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 23................2.94.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 24................2.89.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 14................4.82.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 25................6.20.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 24................4.52.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 23................4.61.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 25................3.80.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 2.................3.84.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 4.................5.38.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 20................3.31.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 7........................4.11...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 9.................4.56.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 9.................3.59.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 3.................5.29.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 9.................2.96.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 7.................4.15.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 6.................0.85.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 7.................5.00.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 22..............109.46.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 5................27.17........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................26......................5.60...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 25................4.13.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 25...............93.10........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 18................5.28.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 27................1.13.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 26...............10.00........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 25...............69.64........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 22................3.80.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 17...............92.50........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 5........................4.88...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 6................76.84........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 11................4.08.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 27................4.04.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 11................3.31.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 13................4.77.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 4.................4.98.........................+......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 10................3.12.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................17.......................4.09...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 2.................4.85.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 26................3.22.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 17................3.31.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 18................3.24.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 11................3.52.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 15................4.13.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 7.................3.26.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 12................4.12.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 17................3.78.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 7................37.08........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 17................4.88.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 21................3.61.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................16......................4.61...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 22................4.75.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 9.................5.23.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 8.................4.54.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 27................2.68.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 17................5.05.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 12................4.19.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 4.................3.10.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 7.................3.06.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 19................0.83.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 6........................4.19...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 3.................5.17.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 8.................4.47.........................+......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 1.................3.12.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 9.................2.91.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 7.................2.33.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 4.................5.00.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 24................2.96.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 5........................3.18...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 4.................3.90.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 4.................4.52.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 6.................4.14.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 20...............26.38........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 11................6.00.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 22..............109.46.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 5................27.17........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 2........................3.13...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 2.................2.82.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 3.................4.05.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 3........................4.13...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 2.................5.09.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 8.................4.25.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 2.................4.85.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 14................3.46.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 6.................3.61.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 16................4.59.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 22................3.25.........................-.......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 3.................4.42.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 13................3.63.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 12................4.19.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 3........................3.40...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 14................4.04.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 4.................4.34.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 4.................3.16.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 2.................3.64.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 8.................3.18.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 3.................4.37.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 4.................5.24.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 20................3.19.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Dnipropetrovsk

143

Key indicators Population (m), 2012................................................................................4.38 Gross Regional Product (UAH m), 2011.............................................161,021 GRP per capita (UAH), 2011.................................................................36,446 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011............................................................12.4

Competitiveness Profiles

Donetsk

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 4......... 4.17 Basic requirements............................................................................................................. 7.........4.46 Institutions.......................................................................................17......3.78 Infrastructure.....................................................................................6......4.20 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................19......5.66 Efficiency enhancers.......................................................................................................... 5.........4.00 Higher education and training............................................................8......4.67 Goods market efficiency .................................................................14......4.11 Labor market efficiency...................................................................19......4.61 Financial market development...........................................................5......4.21 Technological readiness.....................................................................3......3.39 Market size........................................................................................3......3.02

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors....................................................................2.........3.85 Business sophistication ....................................................................1......4.25 Innovation..........................................................................................2......3.44 Donetsk

145

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Donetsk

Regions average

Policy instability...................................................................................... 15.5%................16.9% Tax regulations........................................................................................ 15.3%................13.8% Inefficient government bureaucracy........................................................ 11.6%..................9.9% Corruption................................................................................................. 9.8%................11.3% Tax rates................................................................................................... 9.4%................10.0% Access to financing................................................................................... 8.3%..................6.5% Inflation..................................................................................................... 7.8%..................6.5% Local and national government instability................................................ 7.4%..................6.8% Inadequately educated workforce............................................................. 3.7%..................4.8% Restrictive labour regulations................................................................... 2.4%..................2.1% Regional customs policy........................................................................... 2.4%..................2.0% Foreign currency regulations.................................................................... 2.2%..................1.6% Inadequate supply of infrastructure.......................................................... 1.7%..................4.1% Crime and theft......................................................................................... 1.6%..................1.3% Access to land plots ................................................................................. 1.0%..................2.4%

Donetsk

10%

15%

20%

Regions average

Competitiveness Profiles 146

Donetsk Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 4........................4.17...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 7........................4.46...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 5........................4.00...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 2........................3.85...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................17.......................3.78...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 24................4.34.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 4.................3.41.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 25................3.17.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 21................2.41.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 19................3.90.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 24................2.70.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 21................2.78.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 9.................4.07.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 17................3.20.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 15................3.05.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 9.................3.16.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 5.................4.93.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 15................6.34.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 19................4.61.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 19................4.94.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 21................3.89.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 1.................3.84.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 1.................5.44.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 16................3.39.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 6........................4.20...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 4.................4.66.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 3.................4.06.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 4.................5.27.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 7.................3.78.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 2.................5.32.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 5.................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 15................4.69.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 10..............130.27.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 22...............17.82........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................19......................5.66...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 11................4.47.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 20...............71.90........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 7.................5.53.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 26................1.10.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 27...............12.70........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 25...............69.64........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 17................3.93.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 14...............93.30........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 8........................4.67...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 23...............93.00........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 13...............61.87........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 6.................4.19.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 15................4.24.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 4.................3.59.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 24................4.59.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 5.................4.93.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 1.................3.44.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................14......................4.11...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 4.................4.85.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 27................3.21.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 20................3.26.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 19................3.21.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 16................3.41.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 12................4.22.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 3.................3.41.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 10................4.14.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 8.................4.04.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 15...............22.71........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 13................4.93.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 5.................3.87.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................19......................4.61...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 24................4.72.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 14................5.18.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 17................4.41.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 23................2.86.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 20................4.99.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 6.................4.30.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 2.................3.13.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 6.................3.06.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 22................0.82.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 5........................4.21...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 5.................5.16.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 18................4.33.........................-.......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 2.................3.08.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 17................2.81.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 4.................2.36.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 9.................4.93.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 10................3.30.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 3........................3.39...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 1.................4.21.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 1.................4.72.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 7.................4.10.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 2................43.57........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 4.................7.77.........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 10..............130.27.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 22...............17.82........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 3........................3.02...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 3.................2.61.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 2.................4.25.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 1........................4.25...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 1.................5.20.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 1.................4.39.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 1.................5.28.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 19................3.36.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 4.................3.70.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 19................4.55.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 12................3.46.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 1.................4.66.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 11................3.66.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 6.................4.30.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 2........................3.44...................................+................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 8.................4.11.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 5.................4.27.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 2.................3.33.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 3.................3.61.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 3.................3.47.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 5.................4.22.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 5.................2.64.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 4.................3.41.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Donetsk

147

Key indicators Population (m), 2012................................................................................1.38 Gross Regional Product (UAH m), 2011...............................................26,752 GRP per capita (UAH), 2011.................................................................19,386 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................2.1

Competitiveness Profiles

Ivano-Frankivsk

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 15.........3.98 Basic requirements.......................................................................................................... 21......... 4.37 Institutions.......................................................................................15......3.79 Infrastructure...................................................................................23......3.57 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................5......5.91 Efficiency enhancers....................................................................................................... 15......... 3.74 Higher education and training..........................................................19......4.37 Goods market efficiency .................................................................16......4.09 Labor market efficiency.....................................................................4......4.73 Financial market development.........................................................20......4.09 Technological readiness...................................................................11......3.09 Market size......................................................................................12......2.09

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 6.........3.58 Business sophistication ....................................................................7......4.02 Innovation..........................................................................................7......3.14 Ivano-Frankivsk

149

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Ivano-Frankivsk

Regions average

Policy instability...................................................................................... 18.7%................16.9% Corruption............................................................................................... 12.3%................11.3% Tax regulations........................................................................................ 11.3%................13.8% Local and national government instability................................................ 9.3%..................6.8% Inefficient government bureaucracy.......................................................... 8.7%..................9.9% Tax rates................................................................................................... 8.1%................10.0% Access to financing................................................................................... 7.6%..................6.5% Inflation..................................................................................................... 5.7%..................6.5% Inadequate supply of infrastructure.......................................................... 5.4%..................4.1% Restrictive labour regulations................................................................... 4.2%..................2.1% Access to land plots ................................................................................. 2.9%..................2.4% Inadequately educated workforce............................................................. 2.4%..................4.8% Foreign currency regulations.................................................................... 2.0%..................1.6% Regional customs policy........................................................................... 1.0%..................2.0% Crime and theft......................................................................................... 0.5%..................1.3%

Ivano-Frankivsk

10%

15%

20%

Regions average

Competitiveness Profiles 150

Ivano-Frankivsk Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................15......................3.98...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................21......................4.37...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................15......................3.74...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 6........................3.58...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................15......................3.79...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 23................4.36.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 16................3.23.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 13................3.77.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 6.................2.63.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 18................3.95.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 18................2.81.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 14................3.08.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 25................3.71.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 11................3.35.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 2.................3.33.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 12................3.12.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 24................4.69.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 12................6.40.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 3.................5.05.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 11................5.13.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 10................4.19.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 25................3.36.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 21................5.00.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 24................3.15.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................23......................3.57...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 11................4.49.........................+......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 24................2.82.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 23................4.53.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 21................1.86.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 9.................3.85.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 17................4.65.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 20..............112.24.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 26...............15.46........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 5........................5.91...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 5.................4.74.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 19...............69.60........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 13................5.41.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 2.................0.08.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 4.................6.50.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 2................73.29........................+.....................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 4.................4.18.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 9................95.50........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................19......................4.37...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 20...............94.10........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 19...............46.97........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 13................4.06.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 4.................4.51.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 12................3.31.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 16................4.72.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 17................4.53.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 23................2.96.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................16......................4.09...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 21................4.40.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 1.................4.69.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 11................3.38.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 20................3.19.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 19................3.31.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 7.................4.40.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 9.................3.10.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 23................3.87.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 10................4.03.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 11...............28.00........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 16................4.88.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 27................3.37.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 4........................4.73...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 15................4.84.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 11................5.21.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 1.................4.68.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 6.................3.30.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 9.................5.18.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 11................4.19.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 26................2.36.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 8.................2.86.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 6.................0.90.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................20......................4.09...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................. 8.................5.11.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 6.................4.52.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 16................2.71.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 4.................2.96.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 25................2.01.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 26................4.44.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 11................3.29.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................11.......................3.09...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 7.................3.74.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 9.................4.36.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 2.................4.39.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 17...............29.15........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 27................3.57.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 20..............112.24.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 26...............15.46........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................12......................2.09...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 12................1.91.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 16................2.62.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 7........................4.02...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 5.................4.94.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 20................4.13.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 4.................4.40.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 4.................3.84.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 24................3.16.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 20................4.52.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 21................3.25.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 16................3.98.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 3.................3.85.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 11................4.19.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 7........................3.14...................................+................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 7.................4.11.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 8.................4.00.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 23................2.64.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 7.................3.19.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 16................2.98.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 6.................3.99.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 16................0.89.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 16................3.23.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Ivano-Frankivsk

151

Key indicators Population (m), 2012................................................................................2.74 Gross Regional Product (UAH m), 2011...............................................76,866 GRP per capita (UAH), 2011.................................................................27,966 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................5.9

Competitiveness Profiles

Kharkiv

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................2.........4.25 Basic requirements.............................................................................................................3.........4.54 Institutions.......................................................................................20......3.77 Infrastructure.....................................................................................4......4.46 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................15......5.73 Efficiency enhancers..........................................................................................................2.........4.08 Higher education and training............................................................1......5.28 Goods market efficiency ...................................................................9......4.17 Labor market efficiency.....................................................................3......4.73 Financial market development...........................................................4......4.22 Technological readiness.....................................................................4......3.33 Market size........................................................................................5......2.75

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 1.........3.91 Business sophistication ....................................................................2......4.21 Innovation..........................................................................................1......3.60 Kharkiv

153

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Kharkiv

Regions average

Policy instability...................................................................................... 21.2%................16.9% Tax regulations........................................................................................ 14.8%................13.8% Corruption............................................................................................... 11.4%................11.3% Inefficient government bureaucracy.......................................................... 9.8%..................9.9% Tax rates................................................................................................... 7.1%................10.0% Inflation..................................................................................................... 7.0%..................6.5% Access to financing................................................................................... 5.1%..................6.5% Local and national government instability................................................ 5.0%..................6.8% Inadequately educated workforce............................................................. 3.7%..................4.8% Inadequate supply of infrastructure.......................................................... 3.5%..................4.1% Access to land plots ................................................................................. 3.2%..................2.4% Foreign currency regulations.................................................................... 3.0%..................1.6% Regional customs policy........................................................................... 2.7%..................2.0% Restrictive labour regulations................................................................... 1.5%..................2.1% Crime and theft......................................................................................... 1.0%..................1.3%

Kharkiv

10%

15%

20%

Regions average

Competitiveness Profiles 154

Kharkiv Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 2........................4.25...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 3........................4.54...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 2........................4.08...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 1........................3.91...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................20......................3.77...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 13................4.52.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 5.................3.40.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 21................3.46.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 24................2.39.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 23................3.82.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 22................2.72.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 25................2.72.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 7.................4.13.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 21................3.10.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 11................3.12.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 17................3.03.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 8.................4.91.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 16................6.32.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 12................4.78.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 25................4.50.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 16................4.05.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 10................3.67.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 7.................5.26.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 10................3.50.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 4........................4.46...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 1.................4.91.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 7.................3.78.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 1.................5.51.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 11................2.62.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 3.................5.13.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 2.................5.20.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 5...............141.63.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 6................26.02........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................15......................5.73...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 6.................4.69.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 3................49.80........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 8.................5.53.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 7.................0.16.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 8.................7.60.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 8................71.60........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 10................4.02.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 17...............92.50........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 1........................5.28...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 2..............>100.00......................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 1.................4.55.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 5.................4.50.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 2.................3.69.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 4.................4.96.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 1.................5.51.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 2.................3.31.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 9........................4.17...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 3.................4.85.........................+......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 6.................4.27.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 10................3.39.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 21................3.19.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 4.................3.71.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 24................3.97.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 6.................3.29.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 6.................4.21.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 19................3.73.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 10...............28.39........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 10................4.94.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 15................3.66.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 3........................4.73...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 1.................5.08.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 2.................5.48.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 14................4.45.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 3.................3.32.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 6.................5.21.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 8.................4.28.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 3.................3.10.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 4.................3.31.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 24................0.79.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 4........................4.22...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 1.................5.26.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 3.................4.64.........................+......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 4.................3.00.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 18................2.78.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 22................2.17.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 10................4.90.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 12................3.28.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 4........................3.33...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 2.................4.20.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 6.................4.46.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 16................3.78.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 3................39.31........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 10................6.21.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 5...............141.63.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 6................26.02........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 5........................2.75...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 5.................2.60.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 10................3.19.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 2........................4.21...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 4.................5.04.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 6.................4.30.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 10................4.16.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 6.................3.72.........................+......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 1.................4.17.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 9.................4.77.........................+......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 5.................3.67.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 4.................4.35.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 8.................3.72.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 8.................4.28.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 1........................3.60...................................+................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 6.................4.13.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 1.................4.83.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 3.................3.26.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 1.................3.95.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 5.................3.31.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 1.................4.62.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 3.................6.00.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 5.................3.40.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Kharkiv

155

Key indicators Population (m), 2012................................................................................1.08 Gross Regional Product (UAH m), 2011...............................................18,448 GRP per capita (UAH), 2011.................................................................16,990 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.4

Competitiveness Profiles

Kherson

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013.....................................................................................26.........3.87 Basic requirements..........................................................................................................25.........4.32 Institutions.......................................................................................19......3.77 Infrastructure...................................................................................19......3.66 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................20......5.65 Efficiency enhancers.......................................................................................................26.........3.59 Higher education and training..........................................................18......4.37 Goods market efficiency .................................................................26......4.01 Labor market efficiency...................................................................27......4.42 Financial market development.........................................................25......4.01 Technological readiness...................................................................20......2.99 Market size......................................................................................24......1.70

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors..................................................................17.........3.44 Business sophistication ..................................................................12......3.97 Innovation........................................................................................22......2.90 Kherson

157

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Kherson

Regions average

Policy instability...................................................................................... 17.7%................16.9% Tax regulations........................................................................................ 13.5%................13.8% Tax rates................................................................................................. 12.7%................10.0% Corruption................................................................................................. 9.7%................11.3% Inefficient government bureaucracy.......................................................... 9.6%..................9.9% Access to financing................................................................................... 7.6%..................6.5% Inadequate supply of infrastructure.......................................................... 6.6%..................4.1% Inflation..................................................................................................... 5.2%..................6.5% Local and national government instability................................................ 5.0%..................6.8% Restrictive labour regulations................................................................... 3.6%..................2.1% Inadequately educated workforce............................................................. 3.3%..................4.8% Access to land plots ................................................................................. 1.9%..................2.4% Regional customs policy........................................................................... 1.6%..................2.0% Crime and theft......................................................................................... 1.3%..................1.3% Foreign currency regulations.................................................................... 0.7%..................1.6%

Kherson

10%

15%

20%

Regions average

Competitiveness Profiles 158

Kherson Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................26......................3.87...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................25......................4.32...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................26......................3.59...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................17.......................3.44...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................19......................3.77...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 17................4.44.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 12................3.24.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 17................3.61.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 12................2.58.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 14................4.04.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 11................3.02.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 13................3.09.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 8.................4.09.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 26................2.87.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 14................3.06.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 10................3.16.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 9.................4.89.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 20................6.30.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 21................4.56.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 20................4.92.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 20................3.96.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 26................3.35.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 22................4.98.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 19................3.32.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................19......................3.66...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 23................4.13.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 17................3.22.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 27................4.04.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 5.................4.23.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 21................1.85.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 26................4.09.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 6...............138.34.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 20...............19.44........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................20......................5.65...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 27................4.01.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 27..............108.10.......................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 23................5.23.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 20................0.53.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 12................8.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 22...............69.82........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 16................3.94.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 17...............92.50........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................18......................4.37...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 12...............95.60........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 21...............45.13........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 24................3.87.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 7.................4.41.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 14................3.24.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 11................4.78.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 15................4.59.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 15................3.05.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................26......................4.01...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 24................4.31.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 4.................4.30.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 22................3.22.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 16................3.28.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 20................3.29.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 1.................4.95.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 16................2.81.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 19................3.97.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 14................3.88.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 27................8.78.........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 14................4.89.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 20................3.61.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................27......................4.42...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 19................4.81.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 24................4.97.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 11................4.50.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 17................3.09.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 24................4.86.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 23................4.02.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 27................2.36.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 12................2.65.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 27................0.75.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................25......................4.01...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 18................4.90.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 10................4.45.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 25................2.58.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 22................2.66.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 10................2.30.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 24................4.56.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 23................2.98.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................20......................2.99...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 15................3.54.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 20................4.20.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 22................3.53.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 18...............28.54........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 16................5.61.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 6...............138.34.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 20...............19.44........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................24......................1.70...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 24................1.56.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 24................2.12.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................12......................3.97...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 20................4.55.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 9.................4.24.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 7.................4.34.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 18................3.39.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 7.................3.60.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 2.................4.93.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 16................3.33.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 24................3.85.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 20................3.53.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 23................4.02.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................22......................2.90...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 24................3.91.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 18................3.43.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 21................2.68.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 12................3.01.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 22................2.89.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 21................3.20.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 13................1.14.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 12................3.24.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Kherson

159

Key indicators Population (m), 2012................................................................................1.31 Gross Regional Product (UAH m), 2011...............................................22,843 GRP per capita (UAH), 2011.................................................................17,260 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.8

Competitiveness Profiles

Khmelnytskiy

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 13.........3.98 Basic requirements.......................................................................................................... 19.........4.40 Institutions.........................................................................................1......4.00 Infrastructure...................................................................................24......3.52 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................7......5.86 Efficiency enhancers........................................................................................................11......... 3.76 Higher education and training..........................................................17......4.42 Goods market efficiency ...................................................................2......4.24 Labor market efficiency.....................................................................1......4.80 Financial market development...........................................................7......4.19 Technological readiness...................................................................16......2.99 Market size......................................................................................17......1.94

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 18.........3.43 Business sophistication ..................................................................15......3.93 Innovation........................................................................................19......2.93 Khmelnytskiy

161

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Khmelnytskiy

Regions average

Policy instability...................................................................................... 18.6%................16.9% Tax regulations........................................................................................ 15.1%................13.8% Tax rates................................................................................................. 11.8%................10.0% Corruption................................................................................................. 9.4%................11.3% Access to financing................................................................................... 8.8%..................6.5% Inflation..................................................................................................... 7.5%..................6.5% Local and national government instability................................................ 5.9%..................6.8% Inefficient government bureaucracy.......................................................... 5.0%..................9.9% Inadequately educated workforce............................................................. 4.7%..................4.8% Inadequate supply of infrastructure.......................................................... 3.8%..................4.1% Foreign currency regulations.................................................................... 2.6%..................1.6% Access to land plots ................................................................................. 2.4%..................2.4% Restrictive labour regulations................................................................... 2.0%..................2.1% Crime and theft......................................................................................... 1.4%..................1.3% Regional customs policy........................................................................... 0.9%..................2.0%

Khmelnytskiy

10%

15%

20%

Regions average

Competitiveness Profiles 162

Khmelnytskiy Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................13......................3.98...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................19......................4.40...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................11.......................3.76...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................18......................3.43...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 1........................4.00...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 2.................4.70.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 6.................3.39.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 9.................3.86.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 20................2.46.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 4.................4.28.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 9.................3.09.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 8.................3.27.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 6.................4.18.........................+......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 2.................3.62.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 5.................3.24.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 2.................3.42.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 1.................5.13.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 14................6.36.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 13................4.75.........................-.......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 5.................5.32.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 2.................4.48.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 6.................3.74.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 9.................5.16.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 1.................3.78.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................24......................3.52...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 7.................4.58.........................+......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 16................3.22.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 2.................5.34.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 23................1.82.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 19................1.99.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 13................4.85.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 27...............90.13........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 17...............20.14........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 7........................5.86...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 3.................4.84.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 5................51.80........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 9.................5.53.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 11................0.28.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 21................9.00.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 6................71.96........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 13................3.97.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 5................96.30........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................17.......................4.42...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 18...............94.80........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 15...............53.57........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 21................3.94.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 13................4.26.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 17................3.18.........................-.......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 5.................4.91.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 22................4.39.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 19................3.01.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 2........................4.24...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 5.................4.83.........................+......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 3.................4.32.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 6.................3.61.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 13................3.36.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 6.................3.64.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 22................4.04.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 17................2.81.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 8.................4.19.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 5.................4.15.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 19...............17.58........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 4.................5.10.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 3.................3.93.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 1........................4.80...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 3.................5.03.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 6.................5.29.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 4.................4.61.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 15................3.12.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 1.................5.41.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 2.................4.48.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 14................2.70.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 10................2.81.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 7.................0.90.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 7........................4.19...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 21................4.85.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 16................4.37.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 23................2.60.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 23................2.65.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 20................2.18.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 1.................5.18.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 3.................3.59.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................16......................2.99...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 11................3.60.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 8.................4.39.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 8.................3.99.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 15...............30.42........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 20................4.41.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 27...............90.13........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 17...............20.14........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................17.......................1.94...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 14................1.82.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 23................2.30.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................15......................3.93...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 17................4.62.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 15................4.16.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 21................3.53.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 16................3.42.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 12................3.44.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 15................4.60.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 10................3.56.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 20................3.94.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 2.................3.87.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 2.................4.48.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................19......................2.93...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 3.................4.23.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 19................3.26.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 9.................2.92.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 18................2.79.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 25................2.85.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 22................3.20.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 26................0.09.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 6.................3.39.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Khmelnytskiy

163

Key indicators Population (m), 2012................................................................................1.00 Gross Regional Product (UAH m), 2011...............................................20,041 GRP per capita (UAH), 2011.................................................................19,918 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.5

Competitiveness Profiles

Kirovohrad

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 27.........3.83 Basic requirements..........................................................................................................26.........4.29 Institutions.........................................................................................8......3.94 Infrastructure...................................................................................25......3.50 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................27......5.52 Efficiency enhancers....................................................................................................... 27.........3.55 Higher education and training..........................................................27......4.08 Goods market efficiency .................................................................22......4.05 Labor market efficiency...................................................................24......4.53 Financial market development.........................................................26......4.01 Technological readiness...................................................................26......2.85 Market size......................................................................................23......1.80

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................22.........3.40 Business sophistication ..................................................................22......3.87 Innovation........................................................................................17......2.94 Kirovohrad

165

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Kirovohrad

Regions average

Tax regulations........................................................................................ 13.9%................13.8% Policy instability...................................................................................... 12.0%................16.9% Corruption............................................................................................... 11.6%................11.3% Tax rates................................................................................................. 11.2%................10.0% Inefficient government bureaucracy........................................................ 11.2%..................9.9% Local and national government instability................................................ 9.3%..................6.8% Inadequately educated workforce............................................................. 7.2%..................4.8% Access to financing................................................................................... 5.6%..................6.5% Inflation..................................................................................................... 5.5%..................6.5% Access to land plots ................................................................................. 3.3%..................2.4% Inadequate supply of infrastructure.......................................................... 2.8%..................4.1% Foreign currency regulations.................................................................... 2.7%..................1.6% Restrictive labour regulations................................................................... 1.5%..................2.1% Regional customs policy........................................................................... 1.0%..................2.0% Crime and theft......................................................................................... 1.0%..................1.3%

Kirovohrad

10%

15%

20%

Regions average

Competitiveness Profiles 166

Kirovohrad Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................27......................3.83...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................26......................4.29...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................27......................3.55...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................22......................3.40...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 8........................3.94...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 3.................4.68.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 13................3.24.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 12................3.79.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 1.................2.91.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 2.................4.40.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 8.................3.10.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 12................3.13.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 18................3.81.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 8.................3.40.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 6.................3.21.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 3.................3.39.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 23................4.71.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 1.................6.62.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 15................4.74.........................-.......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 6.................5.28.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 15................4.08.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 13................3.59.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 5.................5.32.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 15................3.40.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................25......................3.50...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 21................4.22.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 25................2.79.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 19................4.73.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 12................2.44.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 18................2.03.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 8.................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 10................4.95.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 25...............96.84........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 21...............18.55........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................27......................5.52...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 23................4.24.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 22...............78.10........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 19................5.27.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 12................0.30.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 24................9.50.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 27...............69.38........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 27................3.55.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 22...............91.60........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................27......................4.08...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 11...............95.80........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 26...............34.39........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 27................3.63.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 24................4.09.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 25................2.83.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 27................4.36.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 25................4.32.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 16................3.03.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................22......................4.05...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 6.................4.81.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 23................3.77.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 4.................3.67.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 25................3.02.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 15................3.44.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 11................4.27.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 27................2.32.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 15................4.08.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 2.................4.37.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 25...............11.13........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 25................4.81.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 8.................3.81.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................24......................4.53...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 18................4.81.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 23................5.03.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 16................4.41.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 22................2.92.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 15................5.07.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 16................4.17.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 24................2.43.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 25................2.09.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 13................0.87.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................26......................4.01...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................. 4.................5.17.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 4.................4.58.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 27................2.52.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 20................2.73.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 15................2.21.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 27................4.42.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 25................2.92.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................26......................2.85...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 20................3.44.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 7.................4.42.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 26................3.23.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 16...............30.29........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 23................3.86.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 25...............96.84........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 21...............18.55........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................23......................1.80...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 23................1.58.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 18................2.44.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................22......................3.87...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 13................4.73.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 4.................4.32.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 18................3.66.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 13................3.49.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 22................3.25.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 18................4.56.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 17................3.32.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 12................4.05.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 27................3.31.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 16................4.17.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................17.......................2.94...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 19................3.98.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 26................2.84.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 5.................3.16.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 13................3.00.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 2.................3.48.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 25................2.96.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 27................0.00.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 13................3.24.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Kirovohrad

167

Key indicators Population (m), 2012................................................................................2.85 Gross Regional Product (UAH m), 2011.............................................223,774 GRP per capita (UAH), 2011.................................................................79,729 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011............................................................17.2

Competitiveness Profiles

Kyiv

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 1.........4.40 Basic requirements............................................................................................................. 1.........4.63 Institutions.......................................................................................27......3.46 Infrastructure.....................................................................................1......5.12 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................14......5.73 Efficiency enhancers.......................................................................................................... 1.........4.36 Higher education and training............................................................2......5.16 Goods market efficiency ...................................................................5......4.19 Labor market efficiency.....................................................................8......4.69 Financial market development.........................................................24......4.03 Technological readiness.....................................................................1......4.38 Market size........................................................................................1......3.71

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 5.........3.62 Business sophistication ..................................................................11......3.98 Innovation..........................................................................................5......3.27 Kyiv

169

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Kyiv

Regions average

Policy instability...................................................................................... 17.2%................16.9% Corruption............................................................................................... 15.3%................11.3% Tax regulations........................................................................................ 14.0%................13.8% Inefficient government bureaucracy........................................................ 11.9%..................9.9% Tax rates................................................................................................... 8.0%................10.0% Inflation..................................................................................................... 6.4%..................6.5% Local and national government instability................................................ 6.1%..................6.8% Access to financing................................................................................... 5.8%..................6.5% Inadequately educated workforce............................................................. 3.0%..................4.8% Regional customs policy........................................................................... 3.0%..................2.0% Inadequate supply of infrastructure.......................................................... 2.6%..................4.1% Foreign currency regulations.................................................................... 2.2%..................1.6% Restrictive labour regulations................................................................... 2.0%..................2.1% Crime and theft......................................................................................... 1.4%..................1.3% Access to land plots ................................................................................. 1.2%..................2.4%

Kyiv

10%

15%

20%

Regions average

Competitiveness Profiles 170

Kyiv Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 1........................4.40...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 1........................4.63...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 1........................4.36...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 5........................3.62...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................27......................3.46...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 27................4.19.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 27................2.94.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 27................2.59.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 27................2.16.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 27................3.44.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 27................2.34.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 27................2.41.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 27................3.59.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 27................2.74.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 27................2.67.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 27................2.67.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 25................4.61.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 21................6.26.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 20................4.60.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 27................4.27.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 27................3.69.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 15................3.55.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 10................5.15.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 25................3.07.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 1........................5.12...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 2.................4.89.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 4.................4.01.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 6.................5.23.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 6.................3.93.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 1.................5.73.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 1.................1.37.........................+......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 5.................5.08.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 1...............243.17.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 2................51.15........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................14......................5.73...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 2.................4.90.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 1................41.00........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 4.................5.59.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 21................0.56.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 10................7.90.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 1................74.15........................+.....................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 3.................4.26.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 27...............90.00........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 2........................5.16...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 1..............>100.00......................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 5.................4.22.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 3.................4.51.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 1.................3.77.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 3.................4.99.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 2.................5.22.........................+......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 20................3.01.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 5........................4.19...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 1.................4.90.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 11................4.09.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 23................3.16.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 24................3.06.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 25................3.12.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 26................3.90.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 1.................3.98.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 26................3.77.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 26................3.27.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 1................92.36........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 21................4.82.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 4.................3.88.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 8........................4.69...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 23................4.73.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 1.................5.52.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 18................4.41.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 26................2.74.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 26................4.81.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 22................4.08.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 1.................3.14.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 1.................4.21.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 16................0.85.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................24......................4.03...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 12................5.07.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 15................4.40.........................+......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 7.................2.91.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 25................2.54.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 13................2.28.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 25................4.51.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 22................2.98.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 1........................4.38...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 3.................3.99.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 2.................4.55.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 3.................4.36.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 1................82.31........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 1................35.22........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 1...............243.17.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 2................51.15........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 1........................3.71...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 1.................3.51.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 1.................4.30.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................11.......................3.98...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 3.................5.08.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 12................4.20.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 12................4.01.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 24................3.29.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 13................3.44.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 25................4.29.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 14................3.45.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 2.................4.46.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 21................3.53.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 22................4.08.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 5........................3.27...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 10................4.08.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 3.................4.44.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 19................2.75.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 5.................3.35.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 26................2.78.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 4.................4.25.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 1................13.90........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 27................2.94.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Kyiv

171

Key indicators Population (m), 2012................................................................................1.72 Gross Regional Product (UAH m), 2011...............................................59,154 GRP per capita (UAH), 2011.................................................................34,420 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................4.5

Competitiveness Profiles

Kyiv Oblast

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 7.........4.06 Basic requirements............................................................................................................. 5......... 4.51 Institutions.......................................................................................14......3.80 Infrastructure.....................................................................................9......4.07 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................1......5.97 Efficiency enhancers.......................................................................................................... 7.........3.83 Higher education and training..........................................................21......4.32 Goods market efficiency ...................................................................8......4.18 Labor market efficiency...................................................................12......4.64 Financial market development.........................................................15......4.10 Technological readiness...................................................................18......2.99 Market size........................................................................................4......2.76

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................20.........3.42 Business sophistication ..................................................................19......3.91 Innovation........................................................................................20......2.93 Kyiv Oblast

173

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Kyiv Oblast

Regions average

Policy instability...................................................................................... 18.2%................16.9% Corruption............................................................................................... 12.8%................11.3% Tax regulations........................................................................................ 12.6%................13.8% Inefficient government bureaucracy........................................................ 10.4%..................9.9% Tax rates................................................................................................... 9.4%................10.0% Inflation..................................................................................................... 7.7%..................6.5% Access to financing................................................................................... 6.6%..................6.5% Local and national government instability................................................ 5.6%..................6.8% Inadequately educated workforce............................................................. 4.4%..................4.8% Inadequate supply of infrastructure.......................................................... 4.3%..................4.1% Regional customs policy........................................................................... 2.6%..................2.0% Access to land plots ................................................................................. 2.1%..................2.4% Restrictive labour regulations................................................................... 1.4%..................2.1% Crime and theft......................................................................................... 1.4%..................1.3% Foreign currency regulations.................................................................... 0.6%..................1.6%

Kyiv Oblast

10%

15%

20%

Regions average

Competitiveness Profiles 174

Kyiv Oblast Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 7........................4.06...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 5........................4.51...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 7........................3.83...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................20......................3.42...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................14......................3.80...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 25................4.31.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 21................3.17.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 11................3.84.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 10................2.61.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 11................4.09.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 13................2.96.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 18................2.96.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 11................3.91.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 4.................3.55.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 18................3.01.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 23................2.97.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 22................4.73.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 24................6.22.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 8.................4.84.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 21................4.91.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 17................4.05.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 14................3.56.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 18................5.04.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 17................3.39.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 9........................4.07...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 5.................4.64.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 5.................3.99.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 20................4.70.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 10................2.70.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 6.................4.37.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 2.................1.32.........................+......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 16................4.69.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 13..............126.87.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 11...............22.43........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 1........................5.97...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 19................4.37.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 16...............68.10........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 21................5.26.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 18................0.42.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 2.................5.70.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 19...............70.12........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 15................3.95.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 1...............100.00.......................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................21......................4.32...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 25...............35.73........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 9.................4.10.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 20................4.19.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 9.................3.33.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 10................4.78.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 19................4.49.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 12................3.08.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 8........................4.18...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 11................4.59.........................+......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 8.................4.21.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 16................3.34.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 27................2.84.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 21................3.27.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 9.................4.28.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 10................3.10.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 25................3.82.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 25................3.46.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 3................61.91........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 15................4.89.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 2.................3.97.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................12......................4.64...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 13................4.84.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 10................5.22.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 5.................4.60.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 20................2.94.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 22................4.91.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 15................4.17.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 5.................3.08.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 5.................3.31.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 21................0.83.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................15......................4.10...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 15................4.97.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 2.................4.64.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 14................2.76.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 24................2.56.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 21................2.18.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 6.................4.94.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 20................3.01.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................18......................2.99...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 17................3.47.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 25................4.02.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 19................3.66.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 10...............32.18........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 14................5.88.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 13..............126.87.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 11...............22.43........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 4........................2.76...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 4.................2.61.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 9.................3.20.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................19......................3.91...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 22................4.54.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 3.................4.33.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 24................3.43.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 26................3.19.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 8.................3.58.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 12................4.63.........................-.......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 6.................3.62.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 9.................4.19.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 16................3.56.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 15................4.17.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................20......................2.93...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 2.................4.24.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 16................3.55.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 26................2.45.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 21................2.70.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 20................2.93.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 13................3.44.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 12................1.21.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 21................3.17.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Kyiv Oblast

175

Key indicators Population (m), 2012................................................................................2.26 Gross Regional Product (UAH m), 2011...............................................57,202 GRP per capita (UAH), 2011.................................................................25,067 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................4.4

Competitiveness Profiles

Luhansk

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 21.........3.96 Basic requirements..........................................................................................................23.........4.34 Institutions.......................................................................................16......3.79 Infrastructure...................................................................................17......3.67 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................17......5.69 Efficiency enhancers....................................................................................................... 14.........3.75 Higher education and training..........................................................10......4.57 Goods market efficiency .................................................................18......4.09 Labor market efficiency...................................................................25......4.49 Financial market development.........................................................22......4.08 Technological readiness...................................................................27......2.78 Market size........................................................................................8......2.47

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 15.........3.48 Business sophistication ..................................................................17......3.93 Innovation........................................................................................13......3.03 Luhansk

177

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Luhansk

Regions average

Policy instability...................................................................................... 19.2%................16.9% Tax regulations........................................................................................ 13.4%................13.8% Corruption............................................................................................... 11.5%................11.3% Inefficient government bureaucracy........................................................ 10.5%..................9.9% Tax rates................................................................................................... 8.3%................10.0% Local and national government instability................................................ 6.6%..................6.8% Access to financing................................................................................... 6.6%..................6.5% Inadequately educated workforce............................................................. 6.3%..................4.8% Inflation..................................................................................................... 5.4%..................6.5% Inadequate supply of infrastructure.......................................................... 4.4%..................4.1% Restrictive labour regulations................................................................... 2.0%..................2.1% Access to land plots ................................................................................. 1.9%..................2.4% Regional customs policy........................................................................... 1.5%..................2.0% Crime and theft......................................................................................... 1.5%..................1.3% Foreign currency regulations.................................................................... 0.8%..................1.6%

Luhansk

10%

15%

20%

Regions average

Competitiveness Profiles 178

Luhansk Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................21......................3.96...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................23......................4.34...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................14......................3.75...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................15......................3.48...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................16......................3.79...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 16................4.45.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 14................3.23.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 20................3.51.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 14................2.56.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 20................3.89.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 16................2.89.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 15................3.05.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 16................3.83.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 9.................3.39.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 13................3.08.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 16................3.05.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 7.................4.91.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 17................6.31.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 25................4.52.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 18................4.95.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 13................4.11.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 17................3.52.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 8.................5.16.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 9.................3.51.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................17.......................3.67...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 26................4.06.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 23................2.89.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 21................4.64.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 15................2.29.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 12................3.35.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 3.................1.03.........................+......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 20................4.53.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 11..............129.83.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 24...............17.38........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................17.......................5.69...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 18................4.39.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 23...............79.40........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 14................5.40.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 16................0.34.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 8.................7.60.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 20...............70.00........................-......................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 8.................4.04.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 20...............92.30........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................10......................4.57...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 20...............94.10........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 8................69.97........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 23................3.87.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 10................4.35.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 19................3.13.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 19................4.68.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 12................4.61.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 27................2.78.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................18......................4.09...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 14................4.55.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 25................3.49.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 9.................3.39.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 11................3.39.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 13................3.47.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 4.................4.51.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 24................2.56.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 14................4.11.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 18................3.75.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 12...............27.50........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 19................4.84.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 10................3.76.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................25......................4.49...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 20................4.80.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 27................4.84.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 2.................4.64.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 19................2.97.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 16................5.06.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 17................4.16.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 16................2.62.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 22................2.23.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 23................0.80.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................22......................4.08...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 24................4.79.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 27................4.01.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 22................2.61.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 6.................2.92.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 24................2.06.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 18................4.82.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 6.................3.44.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................27......................2.78...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 26................3.14.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 27................3.85.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 25................3.37.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 21...............25.74........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 18................5.04.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 11..............129.83.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 24...............17.38........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 8........................2.47...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 9.................2.11.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 4.................3.54.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................17.......................3.93...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 21................4.54.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 23................4.10.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 5.................4.39.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 23................3.29.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 9.................3.57.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 6.................4.83.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 27................2.96.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 18................3.96.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 14................3.61.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 17................4.16.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................13......................3.03...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 22................3.92.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 10................3.80.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 12................2.85.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 14................3.00.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 12................3.02.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 12................3.48.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 17................0.87.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 14................3.23.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Luhansk

179

Key indicators Population (m), 2012................................................................................2.54 Gross Regional Product (UAH m), 2011...............................................52,103 GRP per capita (UAH), 2011.................................................................20,490 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................4.0

Competitiveness Profiles

Lviv

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 6......... 4.07 Basic requirements.......................................................................................................... 14.........4.42 Institutions.......................................................................................21......3.75 Infrastructure...................................................................................12......3.82 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................6......5.90 Efficiency enhancers.......................................................................................................... 6.........3.90 Higher education and training............................................................7......4.80 Goods market efficiency .................................................................23......4.04 Labor market efficiency...................................................................10......4.67 Financial market development.........................................................13......4.15 Technological readiness.....................................................................6......3.17 Market size........................................................................................7......2.59

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 9.........3.52 Business sophistication ..................................................................21......3.88 Innovation..........................................................................................6......3.17 Lviv

181

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Lviv

Regions average

Policy instability...................................................................................... 16.6%................16.9% Tax regulations........................................................................................ 14.5%................13.8% Corruption............................................................................................... 11.7%................11.3% Tax rates................................................................................................... 9.9%................10.0% Local and national government instability................................................ 9.2%..................6.8% Inefficient government bureaucracy.......................................................... 8.0%..................9.9% Inadequate supply of infrastructure.......................................................... 5.8%..................4.1% Inflation..................................................................................................... 5.6%..................6.5% Inadequately educated workforce............................................................. 5.2%..................4.8% Access to financing................................................................................... 5.0%..................6.5% Access to land plots ................................................................................. 2.2%..................2.4% Regional customs policy........................................................................... 2.0%..................2.0% Crime and theft......................................................................................... 1.5%..................1.3% Foreign currency regulations.................................................................... 1.4%..................1.6% Restrictive labour regulations................................................................... 1.3%..................2.1%

Lviv

10%

15%

20%

Regions average

Competitiveness Profiles 182

Lviv Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 6........................4.07...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................14......................4.42...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 6........................3.90...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 9........................3.52...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................21......................3.75...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 26................4.25.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 22................3.17.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 16................3.65.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 17................2.50.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 22................3.84.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 15................2.90.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 16................3.01.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 12................3.91.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 19................3.13.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 24................2.89.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 18................3.02.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 18................4.78.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 10................6.41.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 16................4.72.........................-.......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 4.................5.34.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 26................3.77.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 20................3.49.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 12................5.11.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 18................3.35.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................12......................3.82...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 17................4.31.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 21................2.98.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 7.................5.17.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 18................1.99.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 5.................4.47.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 22................4.51.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 17..............118.05.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 12...............22.17........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 6........................5.90...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 17................4.39.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 15...............66.60........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 25................5.20.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 5.................0.15.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 10................7.90.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 4................73.11........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 14................3.96.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 3................97.00........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 7........................4.80...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 14...............95.20........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 3................81.89........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 14................4.05.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 9.................4.37.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 3.................3.67.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 21................4.63.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 16................4.58.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 26................2.87.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................23......................4.04...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 17................4.46.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 16................3.98.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 21................3.24.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 26................2.85.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 27................2.79.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 23................3.99.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 4.................3.36.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 24................3.84.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 22................3.70.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 5................48.70........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 8.................4.98.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 24................3.52.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................10......................4.67...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 26................4.71.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 15................5.17.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 10................4.50.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 11................3.23.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 3.................5.29.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 26................4.00.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 18................2.54.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 9.................2.82.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 11................0.88.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................13......................4.15...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 9.................5.08.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 11................4.45.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 18................2.68.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 1.................3.09.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 6.................2.33.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 21................4.72.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 15................3.18.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 6........................3.17...................................+................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 18................3.46.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 23................4.10.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 4.................4.34.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 4................36.01........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 3.................8.63.........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 17..............118.05.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 12...............22.17........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 7........................2.59...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 7.................2.47.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 11................2.95.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................21......................3.88...................................-.................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 8.................4.86.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 11................4.20.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 9.................4.23.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 10................3.56.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 26................3.06.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 26................4.22.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 20................3.25.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 14................4.02.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 24................3.41.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 26................4.00.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 6........................3.17...................................+................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 4.................4.22.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 7.................4.07.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 16................2.81.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 4.................3.38.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 24................2.85.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 7.................3.79.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 7.................2.37.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 22................3.17.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Lviv

183

Key indicators Population (m), 2012................................................................................1.17 Gross Regional Product (UAH m), 2011...............................................27,633 GRP per capita (UAH), 2011.................................................................23,402 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................2.1

Competitiveness Profiles

Mykolayiv

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 19.........3.96 Basic requirements.......................................................................................................... 10.........4.43 Institutions.......................................................................................13......3.82 Infrastructure...................................................................................10......4.07 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................23......5.63 Efficiency enhancers....................................................................................................... 21.........3.68 Higher education and training..........................................................14......4.50 Goods market efficiency .................................................................19......4.08 Labor market efficiency...................................................................21......4.59 Financial market development.........................................................27......3.92 Technological readiness...................................................................13......3.06 Market size......................................................................................18......1.93

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 16.........3.46 Business sophistication ..................................................................23......3.85 Innovation..........................................................................................9......3.07 Mykolayiv

185

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Mykolayiv

Regions average

Tax regulations........................................................................................ 15.0%................13.8% Policy instability...................................................................................... 14.5%................16.9% Tax rates................................................................................................. 11.0%................10.0% Corruption............................................................................................... 10.4%................11.3% Inefficient government bureaucracy........................................................ 10.0%..................9.9% Inflation..................................................................................................... 7.9%..................6.5% Access to financing................................................................................... 6.2%..................6.5% Inadequately educated workforce............................................................. 5.7%..................4.8% Local and national government instability................................................ 5.3%..................6.8% Inadequate supply of infrastructure.......................................................... 4.9%..................4.1% Access to land plots ................................................................................. 2.8%..................2.4% Restrictive labour regulations................................................................... 2.3%..................2.1% Regional customs policy........................................................................... 1.8%..................2.0% Foreign currency regulations.................................................................... 1.3%..................1.6% Crime and theft......................................................................................... 0.9%..................1.3%

Mykolayiv

10%

15%

20%

Regions average

Competitiveness Profiles 186

Mykolayiv Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................19......................3.96...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................10......................4.43...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................21......................3.68...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................16......................3.46...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................13......................3.82...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 10................4.55.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 3.................3.43.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 15................3.68.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 5.................2.68.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 10................4.10.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 19................2.79.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 19................2.90.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 24................3.75.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 15................3.22.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 21................2.96.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 22................2.98.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 3.................5.04.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 11................6.40.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 17................4.70.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 22................4.67.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 24................3.82.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 7.................3.73.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 16................5.05.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 7.................3.67.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................10......................4.07...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 20................4.26.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 18................3.18.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 22................4.63.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 2.................5.02.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 14................3.02.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 18................4.65.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 7...............135.76.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 10...............22.59........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................23......................5.63...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 22................4.28.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 24...............87.50........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 24................5.21.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 25................1.05.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 7.................7.20.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 24...............69.72........................-......................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 9.................4.02.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 23...............91.20........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................14......................4.50...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 16...............95.00........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 14...............55.96........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 18................3.98.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 12................4.27.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 8.................3.33.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 12................4.77.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 8.................4.67.........................+......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 18................3.02.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................19......................4.08...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 20................4.41.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 19................3.91.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 27................3.14.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 14................3.34.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 7.................3.60.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 21................4.06.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 13................2.85.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 16................4.06.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 13................3.89.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 13...............26.87........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 24................4.81.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 11................3.75.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................21......................4.59...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 9.................4.99.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 21................5.06.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 25................4.25.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 8.................3.27.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 5.................5.23.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 18................4.16.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 13................2.73.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 24................2.16.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 18................0.84.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................27......................3.92...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 23................4.80.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 25................4.15.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 26................2.58.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 27................2.31.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 26................1.96.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 22................4.65.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 21................2.99.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................13......................3.06...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 24................3.32.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 12................4.32.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 21................3.60.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 9................32.99........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 6.................7.38.........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 7...............135.76.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 10...............22.59........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................18......................1.93...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 25................1.49.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 8.................3.25.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................23......................3.85...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 15................4.71.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 19................4.15.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 15................3.71.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 12................3.55.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 16................3.35.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 13................4.61.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 18................3.30.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 27................3.68.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 23................3.43.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 18................4.16.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 9........................3.07...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 16................4.02.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 15................3.59.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 13................2.84.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 9.................3.17.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 23................2.85.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 9.................3.76.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 9.................1.57.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 3.................3.43.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Mykolayiv

187

Key indicators Population (m), 2012................................................................................2.40 Gross Regional Product (UAH m), 2011...............................................61,499 GRP per capita (UAH), 2011.................................................................25,748 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................4.7

Competitiveness Profiles

Odesa

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................3......... 4.18 Basic requirements.............................................................................................................2.........4.56 Institutions.......................................................................................26......3.67 Infrastructure.....................................................................................2......4.56 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................11......5.78 Efficiency enhancers.......................................................................................................... 4.........4.01 Higher education and training............................................................3......4.96 Goods market efficiency ...................................................................1......4.26 Labor market efficiency...................................................................13......4.64 Financial market development.........................................................23......4.08 Technological readiness.....................................................................2......3.40 Market size........................................................................................6......2.73

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 14.........3.50 Business sophistication ....................................................................9......3.99 Innovation........................................................................................14......3.01 Odesa

189

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Odesa

Regions average

Policy instability...................................................................................... 18.9%................16.9% Tax regulations........................................................................................ 14.0%................13.8% Inefficient government bureaucracy........................................................ 10.2%..................9.9% Tax rates................................................................................................... 9.8%................10.0% Corruption................................................................................................. 9.6%................11.3% Inflation..................................................................................................... 6.8%..................6.5% Access to financing................................................................................... 5.6%..................6.5% Local and national government instability................................................ 5.5%..................6.8% Inadequate supply of infrastructure.......................................................... 4.1%..................4.1% Regional customs policy........................................................................... 4.1%..................2.0% Inadequately educated workforce............................................................. 3.1%..................4.8% Restrictive labour regulations................................................................... 3.0%..................2.1% Foreign currency regulations.................................................................... 2.6%..................1.6% Access to land plots ................................................................................. 2.1%..................2.4% Crime and theft......................................................................................... 0.8%..................1.3%

Odesa

10%

15%

20%

Regions average

Competitiveness Profiles 190

Odesa Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 3........................4.18...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 2........................4.56...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 4........................4.01...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................14......................3.50...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................26......................3.67...................................-.................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 9.................4.56.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 24................3.05.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 18................3.56.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 25................2.35.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 26................3.62.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 23................2.71.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 26................2.50.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 21................3.81.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 23................3.04.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 12................3.10.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 20................3.01.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 6.................4.91.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 18................6.30.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 23................4.55.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 24................4.54.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 12................4.13.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 19................3.51.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 11................5.14.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 26................3.05.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 2........................4.56...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 13................4.41.........................+......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 11................3.44.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 18................4.82.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 1.................5.06.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure..................................................................... 8.................4.06.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 9.................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 25................4.09.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 9...............132.10.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 1................67.97........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................11.......................5.78...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 20................4.34.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 26...............93.90........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 22................5.26.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 24................1.04.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 18................8.90.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 23...............69.78........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 11................4.01.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 8................95.70........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 3........................4.96...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 5................79.24........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 8.................4.12.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 21................4.16.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 5.................3.47.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 8.................4.82.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 3.................5.03.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 8.................3.17.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 1........................4.26...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 8.................4.74.........................+......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 5.................4.29.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 19................3.29.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 6.................3.44.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 18................3.31.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 18................4.12.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 5.................3.30.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 11................4.13.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 27................3.22.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 4................55.39........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 5.................5.03.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 1.................3.99.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................13......................4.64...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 5.................5.02.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 3.................5.36.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 15................4.42.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 12................3.17.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 14................5.07.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 24................4.01.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 6.................3.00.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 3.................3.36.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 25................0.78.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................23......................4.08...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 11................5.07.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 12................4.43.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 17................2.71.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 12................2.86.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 12................2.29.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 16................4.84.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 26................2.80.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 2........................3.40...................................+................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 12................3.57.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 17................4.24.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 10................3.91.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 6................34.87........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 2................10.22........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 9...............132.10.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 1................67.97........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 6........................2.73...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*............................................................... 6.................2.53.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 7.................3.33.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 9........................3.99...................................+................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 7.................4.87.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 13................4.19.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 11................4.12.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 8.................3.63.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 17................3.35.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 27................4.19.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 11................3.52.........................+......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 6.................4.26.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 4.................3.78.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 24................4.01.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................14......................3.01...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 17................4.01.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 9.................3.81.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 25................2.57.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 17................2.84.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 10................3.05.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 10................3.74.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 8.................1.74.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 24................3.05.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Odesa

191

Key indicators Population (m), 2012................................................................................1.47 Gross Regional Product (UAH m), 2011...............................................52,252 GRP per capita (UAH), 2011.................................................................35,246 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................4.0

Competitiveness Profiles

Poltava

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................ 9.........4.02 Basic requirements.......................................................................................................... 12.........4.42 Institutions.........................................................................................7......3.94 Infrastructure...................................................................................15......3.75 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................10......5.80 Efficiency enhancers.......................................................................................................... 9.........3.82 Higher education and training..........................................................12......4.53 Goods market efficiency .................................................................12......4.14 Labor market efficiency...................................................................22......4.57 Financial market development...........................................................3......4.22 Technological readiness...................................................................15......3.04 Market size........................................................................................9......2.42

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................23.........3.39 Business sophistication ..................................................................20......3.88 Innovation........................................................................................21......2.91 Poltava

193

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Poltava

Regions average

Policy instability...................................................................................... 15.4%................16.9% Corruption............................................................................................... 12.2%................11.3% Tax regulations........................................................................................ 11.0%................13.8% Tax rates................................................................................................... 8.7%................10.0% Inefficient government bureaucracy.......................................................... 8.5%..................9.9% Inadequately educated workforce............................................................. 8.0%..................4.8% Local and national government instability................................................ 7.3%..................6.8% Access to financing................................................................................... 7.3%..................6.5% Access to land plots ................................................................................. 5.6%..................2.4% Inadequate supply of infrastructure.......................................................... 4.9%..................4.1% Inflation..................................................................................................... 3.9%..................6.5% Restrictive labour regulations................................................................... 2.3%..................2.1% Regional customs policy........................................................................... 1.7%..................2.0% Foreign currency regulations.................................................................... 1.5%..................1.6% Crime and theft......................................................................................... 1.4%..................1.3%

Poltava

10%

15%

20%

Regions average

Competitiveness Profiles 194

Poltava Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013...................................................................................................................... 9........................4.02...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................12......................4.42...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 9........................3.82...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................23......................3.39...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 7........................3.94...................................+................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 12................4.53.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 7.................3.33.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 1.................4.20.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 4.................2.69.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 9.................4.15.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 10................3.04.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 11................3.17.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 5.................4.22.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 18................3.14.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 9.................3.16.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 4.................3.38.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 21................4.76.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 23................6.23.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 10................4.82.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 14................5.10.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 5.................4.32.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 3.................3.76.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 15................5.05.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 6.................3.68.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................15......................3.75...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 15................4.38.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 15................3.25.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 9.................4.95.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 19................1.93.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 20................1.85.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 12................4.86.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 16..............119.85.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 8................24.70........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................10......................5.80...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 12................4.45.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 10...............60.70........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 16................5.34.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 13................0.30.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 3.................5.90.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 13...............71.04........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 12................3.97.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 10...............94.90........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................12......................4.53...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 16...............95.00........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 10...............66.26........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 22................3.92.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 18................4.20.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 18................3.17.........................-.......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 6.................4.87.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 26................4.28.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 21................2.98.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................12......................4.14...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 16................4.48.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 17................3.97.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 14................3.35.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 3.................3.70.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 5.................3.69.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 17................4.12.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 23................2.59.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 5.................4.28.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 16................3.87.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 16...............21.10........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 9.................4.96.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 12................3.74.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................22......................4.57...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 25................4.71.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 20................5.08.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 19................4.41.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 4.................3.32.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 27................4.77.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 10................4.25.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 8.................2.94.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 15................2.49.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 15................0.85.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 3........................4.22...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 17................4.93.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 19................4.32.........................-.......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 6.................2.92.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 14................2.84.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 9.................2.31.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 5.................4.95.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 4.................3.57.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................15......................3.04...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 23................3.36.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 14................4.29.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 18................3.70.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 5................35.10........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 17................5.36.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 16..............119.85.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 8................24.70........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size................................................................................................................................... 9........................2.42...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 10................2.09.........................+......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 6.................3.41.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................20......................3.88...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 18................4.56.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 27................3.93.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 17................3.68.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 21................3.34.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 18................3.33.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 5.................4.85.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 15................3.44.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 15................4.01.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 17................3.56.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 10................4.25.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................21......................2.91...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 5.................4.16.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 21................3.11.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 7.................2.97.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 22................2.68.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 19................2.94.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 17................3.28.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 21................0.67.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 7.................3.33.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Poltava

195

Key indicators Population (m), 2012................................................................................1.16 Gross Regional Product (UAH m), 2011...............................................19,302 GRP per capita (UAH), 2011.................................................................16,735 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.5

Competitiveness Profiles

Rivne

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 12.........4.00 Basic requirements............................................................................................................. 9.........4.44 Institutions.........................................................................................4......3.95 Infrastructure...................................................................................14......3.77 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................8......5.83 Efficiency enhancers....................................................................................................... 12.........3.75 Higher education and training..........................................................11......4.57 Goods market efficiency .................................................................10......4.16 Labor market efficiency.....................................................................6......4.71 Financial market development...........................................................2......4.23 Technological readiness...................................................................21......2.98 Market size......................................................................................22......1.83

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 12.........3.51 Business sophistication ..................................................................13......3.96 Innovation........................................................................................11......3.05 Rivne

197

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Rivne

Regions average

Policy instability...................................................................................... 15.7%................16.9% Tax regulations........................................................................................ 13.4%................13.8% Corruption............................................................................................... 12.5%................11.3% Tax rates................................................................................................. 12.4%................10.0% Access to financing................................................................................... 8.7%..................6.5% Inefficient government bureaucracy.......................................................... 6.9%..................9.9% Inadequately educated workforce............................................................. 6.5%..................4.8% Inflation..................................................................................................... 5.4%..................6.5% Local and national government instability................................................ 3.9%..................6.8% Inadequate supply of infrastructure.......................................................... 3.8%..................4.1% Access to land plots ................................................................................. 2.6%..................2.4% Crime and theft......................................................................................... 2.6%..................1.3% Restrictive labour regulations................................................................... 2.5%..................2.1% Regional customs policy........................................................................... 1.8%..................2.0% Foreign currency regulations.................................................................... 1.2%..................1.6%

Rivne

10%

15%

20%

Regions average

Competitiveness Profiles 198

Rivne Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................12......................4.00...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 9........................4.44...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................12......................3.75...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................12......................3.51...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 4........................3.95...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 5.................4.60.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 8.................3.33.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 4.................3.95.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 22................2.41.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 6.................4.25.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 12................3.00.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 7.................3.28.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 3.................4.31.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 10................3.39.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 7.................3.18.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 5.................3.27.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 11................4.86.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 6.................6.52.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 6.................4.84.........................+......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 8.................5.26.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 6.................4.32.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 8.................3.73.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 17................5.05.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 11................3.49.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................14......................3.77...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 3.................4.72.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 2.................4.17.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 5.................5.26.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 22................1.86.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 17................2.36.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 1.................5.22.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 24..............103.91.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 25...............17.18........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 8........................5.83...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 16................4.40.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 11...............61.50........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 11................5.42.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 8.................0.21.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 16................8.10.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 9................71.44........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 18................3.92.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 5................96.30........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................11.......................4.57...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 19...............94.60........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 16...............53.55........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 2.................4.44.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 22................4.15.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................. 7.................3.34.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 7.................4.87.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 6.................4.83.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 3.................3.28.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................10......................4.16...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 22................4.36.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 15................3.99.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 3.................3.77.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 9.................3.39.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 3.................3.73.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 6.................4.44.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 21................2.73.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 3.................4.36.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 7.................4.05.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 18...............18.23........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 3.................5.11.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 22................3.60.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 6........................4.71...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 6.................5.01.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 25................4.95.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 23................4.34.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 16................3.10.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 10................5.10.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 1.................4.50.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 12................2.74.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 20................2.32.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 1.................0.95.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 2........................4.23...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 2.................5.18.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 9.................4.45.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 11................2.79.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 2.................3.09.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 23................2.13.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 15................4.84.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 5.................3.57.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................21......................2.98...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 10................3.63.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 3.................4.55.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 11................3.90.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 24...............24.02........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 26................3.62.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 24..............103.91.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 25...............17.18........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................22......................1.83...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 21................1.64.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 21................2.38.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................13......................3.96...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 12................4.74.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 16................4.16.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 19................3.63.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 22................3.32.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 14................3.38.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 17................4.57.........................-.......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 1.................3.80.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 13................4.04.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 6.................3.77.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 1.................4.50.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................11.......................3.05...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 12................4.07.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 12................3.75.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 17................2.80.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 8.................3.18.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 13................3.00.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 15................3.41.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 24................0.11.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 8.................3.33.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Rivne

199

Key indicators Population (m), 2012................................................................................0.38 Gross Regional Product (UAH m), 2011.................................................9,359 GRP per capita (UAH), 2011.................................................................24,564 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................0.7

Competitiveness Profiles

Sevastopol

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 10.........4.01 Basic requirements............................................................................................................. 4.........4.53 Institutions.......................................................................................24......3.69 Infrastructure.....................................................................................3......4.51 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................16......5.71 Efficiency enhancers.......................................................................................................22.........3.66 Higher education and training............................................................6......4.87 Goods market efficiency .................................................................20......4.07 Labor market efficiency...................................................................20......4.61 Financial market development.........................................................21......4.08 Technological readiness...................................................................10......3.12 Market size......................................................................................27......1.23

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................... 4.........3.64 Business sophistication ..................................................................16......3.93 Innovation..........................................................................................4......3.35 Sevastopol

201

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Sevastopol

Regions average

Tax regulations........................................................................................ 15.5%................13.8% Inefficient government bureaucracy........................................................ 12.9%..................9.9% Policy instability...................................................................................... 12.3%................16.9% Corruption............................................................................................... 11.8%................11.3% Tax rates................................................................................................. 10.0%................10.0% Inflation..................................................................................................... 7.0%..................6.5% Access to financing................................................................................... 6.6%..................6.5% Local and national government instability................................................ 5.8%..................6.8% Inadequately educated workforce............................................................. 4.0%..................4.8% Access to land plots ................................................................................. 3.6%..................2.4% Inadequate supply of infrastructure.......................................................... 2.7%..................4.1% Regional customs policy........................................................................... 2.5%..................2.0% Foreign currency regulations.................................................................... 2.4%..................1.6% Restrictive labour regulations................................................................... 1.8%..................2.1% Crime and theft......................................................................................... 1.0%..................1.3%

Sevastopol

10%

15%

20%

Regions average

Competitiveness Profiles 202

Sevastopol Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................10......................4.01...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................. 4........................4.53...................................+................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................22......................3.66...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 4........................3.64...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................24......................3.69...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 19................4.42.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 15................3.23.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 24................3.23.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 16................2.50.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 24................3.77.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 25................2.67.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 23................2.72.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 2.................4.40.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 24................2.97.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 16................3.03.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 8.................3.17.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 15................4.81.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 22................6.25.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 26................4.50.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 16................4.99.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 23................3.86.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 22................3.42.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 19................5.03.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 23................3.24.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 3........................4.51...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 6.................4.62.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 1.................4.68.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 15................4.89.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 4.................4.69.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 11................3.44.........................+......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 11................4.87.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 3...............148.96.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 4................29.11........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................16......................5.71...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 1.................4.95.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 12...............62.00........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 3.................5.60.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 23................0.82.........................-.......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 1.................5.20.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 12...............71.10........................-......................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 2.................4.28.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 26...............90.40........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 6........................4.87...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 1...............100.00.......................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 7................75.40........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 7.................4.16.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 2.................4.67.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 13................3.24.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 1.................5.22.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 14................4.60.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 22................2.98.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................20......................4.07...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 12................4.57.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 14................4.02.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 25................3.15.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 10................3.39.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 14................3.46.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 10................4.27.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 11................3.08.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 9.................4.15.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 21................3.71.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 22...............13.96........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 20................4.83.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 7.................3.83.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................20......................4.61...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 27................4.63.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 7.................5.27.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 27................4.15.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 24................2.82.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 25................4.83.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 14................4.18.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 7.................2.96.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent........................................................................... 2.................3.40.........................+......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 12................0.87.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................21......................4.08...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................. 7.................5.11.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 20................4.31.........................-.......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 5.................2.93.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 10................2.90.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 5.................2.34.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 17................4.82.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 27................2.73.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................10......................3.12...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 8.................3.71.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 16................4.26.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 23................3.44.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 11...............30.88........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 24................3.85.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ....................................................... 3...............148.96.......................+....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 4................29.11........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................27......................1.23...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 27................1.00.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 25................1.94.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................16......................3.93...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 24................4.40.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 22................4.11.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 6.................4.37.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 3.................3.98.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 15................3.36.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 23................4.36.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 26................3.13.........................-.......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 8.................4.21.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 25................3.36.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 14................4.18.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation..................................................................................................................................... 4........................3.35...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 15................4.04.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions............................................................... 2.................4.51.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 6.................2.97.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D............................................................... 6.................3.27.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 17................2.98.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers.................................................................. 2.................4.48.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 2.................8.65.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 15................3.23.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Sevastopol

203

Key indicators Population (m), 2012................................................................................1.14 Gross Regional Product (UAH m), 2011...............................................22,907 GRP per capita (UAH), 2011.................................................................19,800 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.8

Competitiveness Profiles

Sumy

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 14.........3.98 Basic requirements..........................................................................................................22.........4.35 Institutions.........................................................................................9......3.94 Infrastructure...................................................................................20......3.63 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................25......5.61 Efficiency enhancers....................................................................................................... 10......... 3.77 Higher education and training............................................................9......4.60 Goods market efficiency ...................................................................6......4.19 Labor market efficiency...................................................................18......4.61 Financial market development...........................................................1......4.26 Technological readiness...................................................................19......2.99 Market size......................................................................................16......1.96

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors....................................................................8.........3.55 Business sophistication ....................................................................4......4.05 Innovation........................................................................................10......3.05 Sumy

205

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Sumy

Regions average

Tax regulations........................................................................................ 17.7%................13.8% Policy instability...................................................................................... 17.0%................16.9% Tax rates................................................................................................. 16.8%................10.0% Inflation..................................................................................................... 7.6%..................6.5% Inefficient government bureaucracy.......................................................... 6.6%..................9.9% Corruption................................................................................................. 6.5%................11.3% Local and national government instability................................................ 6.5%..................6.8% Inadequately educated workforce............................................................. 5.0%..................4.8% Access to financing................................................................................... 4.7%..................6.5% Inadequate supply of infrastructure.......................................................... 3.0%..................4.1% Restrictive labour regulations................................................................... 2.7%..................2.1% Access to land plots ................................................................................. 2.3%..................2.4% Crime and theft......................................................................................... 1.6%..................1.3% Regional customs policy........................................................................... 1.4%..................2.0% Foreign currency regulations.................................................................... 0.7%..................1.6%

Sumy

10%

15%

20%

Regions average

Competitiveness Profiles 206

Sumy Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................14......................3.98...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................22......................4.35...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................10......................3.77...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors...................................................................... 8........................3.55...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 9........................3.94...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 8.................4.56.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 11................3.27.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 3.................3.97.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 9.................2.62.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 5.................4.25.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 3.................3.18.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 6.................3.31.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 10................3.97.........................+......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 13................3.33.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 19................3.01.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 19................3.02.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 10................4.87.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 2.................6.58.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 14................4.74.........................-.......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 3.................5.35.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 8.................4.29.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 18................3.52.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 3.................5.40.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 2.................3.77.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................20......................3.63...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 22................4.22.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 27................2.69.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure............................................................................ 8.................5.01.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 25................1.75.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 22................1.68.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 4.................5.14.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 19..............114.15.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 15...............21.19........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................25......................5.61...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 4.................4.80.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 8................56.80........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 1.................5.75.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 6.................0.15.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 5.................7.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 11...............71.22........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 23................3.79.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 24...............91.00........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 9........................4.60...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 27...............92.40........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 9................69.73........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system.......................................................................... 4.................4.28.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 11................4.29.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 23................2.90.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 15................4.73.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 13................4.60.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 14................3.05.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 6........................4.19...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 26................4.22.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 18................3.95.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 1.................4.01.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 2.................3.72.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 2.................3.76.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 2.................4.63.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 19................2.76.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 1.................4.80.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 6.................4.06.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 14...............24.14........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 7.................4.98.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 26................3.48.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................18......................4.61...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 7.................5.01.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 16................5.15.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 22................4.39.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 18................3.05.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 21................4.92.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 4.................4.37.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 23................2.46.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 19................2.35.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 10................0.88.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 1........................4.26...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 10................5.08.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services........................................................................... 1.................4.68.........................+......................4.38........... 4.68 Sumy Financing through local equity market................................................................... 8.................2.88.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 8.................2.91.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 27................1.90.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 14................4.85.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 1.................3.82.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................19......................2.99...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 14................3.54.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 11................4.34.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 13................3.87.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 22...............25.13........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 19................4.51.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 19..............114.15.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 15...............21.19........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................16......................1.96...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 20................1.68.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 14................2.79.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 4........................4.05...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 25................4.38.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 10................4.21.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 22................3.52.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 1.................3.99.........................+......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 3.................3.73.........................+......................3.43........... 4.17 Kharkiv Control of international distribution....................................................................... 1.................5.14.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 13................3.46.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 21................3.91.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 1.................3.98.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 4.................4.37.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................10......................3.05...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 21................3.94.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 14................3.62.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 1.................3.33.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 15................2.98.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 9.................3.12.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 19................3.22.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 19................0.75.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 11................3.27.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Sumy

207

Key indicators Population (m), 2012................................................................................1.08 Gross Regional Product (UAH m), 2011...............................................16,294 GRP per capita (UAH), 2011.................................................................15,055 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.3

Competitiveness Profiles

Ternopil

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 24.........3.88 Basic requirements.......................................................................................................... 24.........4.33 Institutions.......................................................................................11......3.88 Infrastructure...................................................................................27......3.31 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................4......5.93 Efficiency enhancers.......................................................................................................25.........3.63 Higher education and training..........................................................16......4.47 Goods market efficiency .................................................................27......4.01 Labor market efficiency...................................................................14......4.64 Financial market development.........................................................16......4.10 Technological readiness...................................................................25......2.89 Market size......................................................................................25......1.70

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 24.........3.34 Business sophistication ..................................................................25......3.81 Innovation........................................................................................23......2.87 Ternopil

209

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Ternopil

Regions average

Policy instability...................................................................................... 16.9%................16.9% Corruption............................................................................................... 14.4%................11.3% Tax regulations........................................................................................ 13.3%................13.8% Tax rates................................................................................................... 9.0%................10.0% Inefficient government bureaucracy.......................................................... 8.3%..................9.9% Access to financing................................................................................... 7.8%..................6.5% Local and national government instability................................................ 7.5%..................6.8% Inadequately educated workforce............................................................. 6.9%..................4.8% Inadequate supply of infrastructure.......................................................... 4.7%..................4.1% Inflation..................................................................................................... 4.4%..................6.5% Access to land plots ................................................................................. 3.7%..................2.4% Crime and theft......................................................................................... 1.6%..................1.3% Regional customs policy........................................................................... 0.8%..................2.0% Restrictive labour regulations................................................................... 0.7%..................2.1% Foreign currency regulations.................................................................... 0.1%..................1.6%

Ternopil

10%

15%

20%

Regions average

Competitiveness Profiles 210

Ternopil Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................24......................3.88...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................24......................4.33...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................25......................3.63...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................24......................3.34...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................11.......................3.88...................................+................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 11................4.54.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 23................3.07.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 14................3.76.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 8.................2.63.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 3.................4.32.........................+......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 14................2.93.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 9.................3.26.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 26................3.65.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 6.................3.48.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 22................2.96.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 25................2.88.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 16................4.81.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 3.................6.57.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 1.................5.18.........................+......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 1.................5.59.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 1.................4.50.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 24................3.40.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 13................5.09.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 21................3.27.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................27......................3.31...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 25................4.09.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 22................2.98.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 13................4.90.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 24................1.79.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 24................1.60.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 21................4.52.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 26...............91.00........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 18...............20.12........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 4........................5.93...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 8.................4.62.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 6................52.20........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 12................5.41.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 4.................0.12.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 12................8.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 3................73.24........................+.....................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 6.................4.07.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 4................96.80........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................16......................4.47...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 26...............92.70........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 12...............62.19........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 15................4.05.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 6.................4.45.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 10................3.32.........................+......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 26................4.48.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 20................4.44.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 25................2.89.........................-.......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................27......................4.01...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 23................4.34.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 13................4.06.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 8.................3.49.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 17................3.24.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 23................3.21.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 3.................4.55.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 25................2.40.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 20................3.95.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 15................3.88.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 21...............14.42........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 22................4.82.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 17................3.63.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................14......................4.64...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 12................4.89.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 5.................5.32.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 6.................4.57.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 14................3.14.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 13................5.08.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 21................4.09.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 25................2.41.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 26................2.05.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 8.................0.90.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................16......................4.10...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 19................4.89.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 23................4.22.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 19................2.67.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 3.................3.01.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 17................2.19.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 13................4.86.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 16................3.16.........................-.......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................25......................2.89...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 22................3.37.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 26................4.01.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 15................3.82.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 13...............30.72........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 12................5.92.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 26...............91.00........................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 18...............20.12........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................25......................1.70...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 22................1.63.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 26................1.90.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................25......................3.81...................................-.................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 9.................4.80.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 24................4.08.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 20................3.58.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 25................3.23.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 27................2.97.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 11................4.66.........................+......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 7.................3.61.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 23................3.88.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 26................3.32.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 21................4.09.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................23......................2.87...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 9.................4.08.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 25................2.94.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 18................2.75.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 20................2.74.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 7.................3.27.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 23................3.19.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 15................1.03.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 23................3.07.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Ternopil

211

Key indicators Population (m), 2012................................................................................1.63 Gross Regional Product (UAH m), 2011...............................................29,099 GRP per capita (UAH), 2011.................................................................17,768 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................2.2

Competitiveness Profiles

Vinnytsya

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013..................................................................................... 16......... 3.97 Basic requirements...........................................................................................................17.........4.40 Institutions.........................................................................................2......3.99 Infrastructure...................................................................................16......3.71 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................18......5.68 Efficiency enhancers........................................................................................................17.........3.73 Higher education and training..........................................................23......4.32 Goods market efficiency .................................................................13......4.12 Labor market efficiency.....................................................................7......4.71 Financial market development.........................................................14......4.11 Technological readiness...................................................................12......3.07 Market size......................................................................................13......2.05

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 13.........3.51 Business sophistication ..................................................................14......3.96 Innovation........................................................................................12......3.05 Vinnytsya

213

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Vinnytsya

Regions average

Policy instability...................................................................................... 19.0%................16.9% Corruption............................................................................................... 13.4%................11.3% Tax regulations........................................................................................ 12.0%................13.8% Inefficient government bureaucracy.......................................................... 9.2%..................9.9% Tax rates................................................................................................... 8.9%................10.0% Inflation..................................................................................................... 8.9%..................6.5% Access to financing................................................................................... 6.0%..................6.5% Local and national government instability................................................ 5.4%..................6.8% Access to land plots ................................................................................. 4.1%..................2.4% Inadequate supply of infrastructure.......................................................... 3.8%..................4.1% Inadequately educated workforce............................................................. 3.4%..................4.8% Restrictive labour regulations................................................................... 2.8%..................2.1% Crime and theft......................................................................................... 1.6%..................1.3% Foreign currency regulations.................................................................... 1.0%..................1.6% Regional customs policy........................................................................... 0.4%..................2.0%

Vinnytsya

10%

15%

20%

Regions average

Competitiveness Profiles 214

Vinnytsya Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................16......................3.97...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................17.......................4.40...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................17.......................3.73...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................13......................3.51...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 2........................3.99...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 6.................4.59.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 1.................3.44.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 5.................3.91.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 2.................2.91.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 13................4.05.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 4.................3.17.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 4.................3.35.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 4.................4.26.........................+......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 7.................3.43.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 3.................3.29.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 14................3.11.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 13................4.82.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 19................6.30.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 2.................5.08.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 12................5.11.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 3.................4.47.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms........................................................................................ 5.................3.74.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 20................5.03.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 4.................3.72.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................16......................3.71...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure.............................................................................. 8.................4.58.........................+......................4.41........... 4.91 Kharkiv Quality of roads...................................................................................................... 8.................3.72.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 17................4.86.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 14................2.33.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 16................2.52.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 14................4.84.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 23..............107.63.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 19...............19.69........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................18......................5.68...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 15................4.40.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 7................55.40........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 27................5.04.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 9.................0.22.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 22................9.10.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*.......................................................................................... 7................71.89........................+.....................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 20................3.90.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 20...............92.30........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................23......................4.32...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 22...............93.80........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 22...............44.89........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 17................3.99.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 16................4.23.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 21................3.01.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 25................4.52.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 11................4.61.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 6.................3.18.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................13......................4.12...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 19................4.42.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 12................4.07.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 7.................3.54.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 5.................3.52.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 1.................3.78.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 20................4.08.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 14................2.84.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 13................4.11.........................+......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 11................4.00.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 23...............13.05........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 11................4.93.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 14................3.72.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 7........................4.71...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 14................4.84.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 19................5.10.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 20................4.41.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 7.................3.30.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 11................5.10.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 9.................4.25.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent............................................................................ 9.................2.84.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 14................2.51.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 4.................0.92.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................14......................4.11...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 27................4.60.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 26................4.14.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 10................2.86.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 26................2.51.........................-.......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 18................2.19.........................-.......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 11................4.87.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 2.................3.61.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................12......................3.07...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 13................3.57.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption........................................................................... 5.................4.49.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 12................3.87.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 14...............30.70........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 7.................7.26.........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 23..............107.63.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 19...............19.69........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................13......................2.05...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 13................1.91.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 17................2.49.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................14......................3.96...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 16................4.68.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 17................4.16.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 16................3.71.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage............................................................................ 7.................3.66.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 11................3.47.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 14................4.61.........................-.......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 2.................3.73.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 17................3.98.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 19................3.53.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 9.................4.25.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................12......................3.05...................................+................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 11................4.07.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 17................3.52.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 22................2.68.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 10................3.14.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 4.................3.45.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 18................3.26.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 18................0.76.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 1.................3.44.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Vinnytsya

215

Key indicators Population (m), 2012................................................................................1.04 Gross Regional Product (UAH m), 2011...............................................17,637 GRP per capita (UAH), 2011.................................................................16,993 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.4

Competitiveness Profiles

Volyn

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013......................................................................................17......... 3.97 Basic requirements.......................................................................................................... 18.........4.40 Institutions.........................................................................................5......3.95 Infrastructure...................................................................................21......3.61 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................9......5.83 Efficiency enhancers....................................................................................................... 16.........3.73 Higher education and training..........................................................24......4.30 Goods market efficiency ...................................................................4......4.19 Labor market efficiency.....................................................................9......4.68 Financial market development...........................................................8......4.17 Technological readiness.....................................................................7......3.14 Market size......................................................................................20......1.90

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 19.........3.43 Business sophistication ..................................................................18......3.92 Innovation........................................................................................18......2.94 Volyn

217

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Volyn

Regions average

Policy instability...................................................................................... 14.3%................16.9% Tax regulations........................................................................................ 13.6%................13.8% Tax rates................................................................................................. 11.7%................10.0% Inefficient government bureaucracy........................................................ 11.4%..................9.9% Corruption............................................................................................... 10.3%................11.3% Access to financing................................................................................... 7.9%..................6.5% Inflation..................................................................................................... 6.9%..................6.5% Local and national government instability................................................ 5.6%..................6.8% Inadequate supply of infrastructure.......................................................... 4.9%..................4.1% Inadequately educated workforce............................................................. 3.7%..................4.8% Regional customs policy........................................................................... 3.5%..................2.0% Access to land plots ................................................................................. 2.2%..................2.4% Foreign currency regulations.................................................................... 1.4%..................1.6% Crime and theft......................................................................................... 1.4%..................1.3% Restrictive labour regulations................................................................... 1.3%..................2.1%

Volyn

10%

15%

20%

Regions average

Competitiveness Profiles 218

Volyn Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................17.......................3.97...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................18......................4.40...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................16......................3.73...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................19......................3.43...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 5........................3.95...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 4.................4.61.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 2.................3.44.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 7.................3.88.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 13................2.58.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes............................................................................... 8.................4.17.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 5.................3.14.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 1.................3.59.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending.................................................................. 1.................4.46.........................+......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 5.................3.53.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 1.................3.37.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 6.................3.24.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 12................4.83.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 26................6.10.........................-.......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 7.................4.84.........................+......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 2.................5.36.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 9.................4.27.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 27................3.35.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 6.................5.29.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests...................................................... 13................3.43.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................21......................3.61...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 19................4.29.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 12................3.35.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 12................4.90.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 27................1.69.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 26................1.47.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 9.................4.96.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 15..............123.17.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 23...............17.61........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 9........................5.83...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis............................................................................ 7.................4.62.........................+......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 4................51.50........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 2.................5.62.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 10................0.26.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................. 5.................7.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 14...............70.95........................-......................71.13........ 74.15 Kyiv Quality of primary education.................................................................................. 5.................4.12.........................+......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 11...............94.80........................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................24......................4.30...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 10...............96.30........................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 23...............42.75........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 10................4.09.........................+......................4.06........... 4.55 Kharkiv Quality of math and science education.................................................................. 8.................4.40.........................+......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 24................2.84.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 17................4.71.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 23................4.36.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training........................................................................................... 11................3.11.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 4........................4.19...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 15................4.51.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 20................3.87.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy................................................................... 5.................3.62.........................+......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 15................3.32.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs......................................................................................... 9.................3.56.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 25................3.94.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 8.................3.14.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 2.................4.52.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 3.................4.36.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 6................43.82........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 27................4.76.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication.............................................................................................. 6.................3.85.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 9........................4.68...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 17................4.81.........................-.......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 22................5.05.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 7.................4.54.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 9.................3.23.........................+......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 12................5.09.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 13................4.19.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 19................2.53.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 17................2.43.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 3.................0.93.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 8........................4.17...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 25................4.77.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 24................4.17.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 13................2.77.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 11................2.86.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 2.................2.36.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks............................................................................................... 3.................5.02.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 7.................3.44.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 7........................3.14...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 5.................3.88.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 10................4.35.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 5.................4.27.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 19...............28.07........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 15................5.74.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 15..............123.17.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 23...............17.61........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................20......................1.90...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 19................1.71.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 19................2.44.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................18......................3.92...................................-.................................3.96.................4.25 Donetsk Local supplier quantity........................................................................................... 6.................4.88.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 5.................4.31.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 25................3.26.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 11................3.55.........................+......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 20................3.28.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 22................4.49.........................-.......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 8.................3.59.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 11................4.14.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 12................3.64.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 13................4.19.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................18......................2.94...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation.......................................................................................... 1.................4.25.........................+......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 23................3.00.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 15................2.83.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 23................2.68.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 1.................3.53.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 24................3.02.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 22................0.35.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 2.................3.44.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Volyn

219

Key indicators Population (m), 2012................................................................................1.25 Gross Regional Product (UAH m), 2011...............................................18,054 GRP per capita (UAH), 2011.................................................................14,455 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.4

Competitiveness Profiles

Zakarpattya

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013.....................................................................................20.........3.96 Basic requirements.......................................................................................................... 13.........4.42 Institutions.........................................................................................3......3.95 Infrastructure...................................................................................22......3.59 Macroeconomic environment............................................................1......4.20 Health and primary education............................................................3......5.93 Efficiency enhancers....................................................................................................... 19......... 3.71 Higher education and training..........................................................26......4.15 Goods market efficiency ...................................................................7......4.18 Labor market efficiency...................................................................17......4.61 Financial market development.........................................................11......4.15 Technological readiness.....................................................................9......3.14 Market size......................................................................................14......2.05

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors.................................................................25.........3.32 Business sophistication ..................................................................26......3.80 Innovation........................................................................................24......2.84 Zakarpattya

221

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Zakarpattya

Regions average

Policy instability...................................................................................... 17.0%................16.9% Tax regulations........................................................................................ 13.8%................13.8% Tax rates................................................................................................... 9.6%................10.0% Corruption................................................................................................. 9.2%................11.3% Inefficient government bureaucracy.......................................................... 8.7%..................9.9% Inflation..................................................................................................... 8.6%..................6.5% Inadequate supply of infrastructure.......................................................... 7.2%..................4.1% Local and national government instability................................................ 6.6%..................6.8% Inadequately educated workforce............................................................. 5.6%..................4.8% Regional customs policy........................................................................... 4.4%..................2.0% Access to financing................................................................................... 3.8%..................6.5% Access to land plots ................................................................................. 2.1%..................2.4% Foreign currency regulations.................................................................... 2.0%..................1.6% Restrictive labour regulations................................................................... 1.3%..................2.1% Crime and theft......................................................................................... 0.1%..................1.3%

Zakarpattya

10%

15%

20%

Regions average

Competitiveness Profiles 222

Zakarpattya Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

Competitiveness Index 2013.....................................................................................................................20......................3.96...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................13......................4.42...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................19......................3.71...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................25......................3.32...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions....................................................................................................................................... 3........................3.95...................................+................................3.83.................4.00 Khmelnytsky Property rights....................................................................................................... 1.................4.75.........................+......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 10................3.29.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds....................................................................................... 6.................3.88.........................+......................3.65........... 4.20 Poltava Public trust in politicians....................................................................................... 7.................2.63.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 15................4.01.........................-.......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 2.................3.22.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 10................3.22.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 17................3.83.........................-.......................3.95........... 4.46 Volyn Burden of government regulation.......................................................................... 3.................3.58.........................+......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes.................................................. 8.................3.16.........................+......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations....................................... 7.................3.22.........................+......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 2.................5.05.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism.................................................................................. 13................6.39.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 9.................4.83.........................+......................4.75........... 5.18 Ternopil Organized crime..................................................................................................... 9.................5.19.........................+......................5.01........... 5.59 Ternopil Reliability of police services................................................................................... 7.................4.30.........................+......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 11................3.66.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 23................4.94.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholdersâ&#x20AC;&#x2122; interests....................................................... 5.................3.70.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0â&#x20AC;&#x201C;10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................22......................3.59...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 16................4.36.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 13................3.30.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 11................4.94.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 20................1.88.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 15................2.70.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 19................4.61.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 14..............125.73.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 27...............14.12........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education............................................................................................ 3........................5.93...................................+................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 21................4.29.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*.................................................................. 9................58.10........................+.....................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 17................5.32.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*............................................................................... 1.................0.04.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 18................8.90.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 14...............70.95........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 24................3.77.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*........................................................... 1...............100.00.......................+.....................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................26......................4.15...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 9................97.50........................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 27...............28.37........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 19................3.96.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 17................4.21.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 20................3.06.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 14................4.76.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 24................4.34.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 7.................3.18.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ....................................................................................................... 7........................4.18...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 18................4.43.........................-.......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 21................3.85.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 13................3.36.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 12................3.37.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 22................3.27.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 27................3.90.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Best performing region

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership............................................................................ 2.................3.93.........................+......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 17................4.06.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 12................3.95.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 2................83.68........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 6.................5.01.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 25................3.49.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................17.......................4.61...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 4.................5.03.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 13................5.18.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices...................................................................................... 9.................4.52.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 13................3.14.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 8.................5.21.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 ............................................................. 25................4.01.........................-.......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 20................2.53.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 13................2.57.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 20................0.83.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................11.......................4.15...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................ 13................5.02.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 22................4.22.........................-.......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 20................2.65.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans.......................................................................................... 5.................2.95.........................+......................2.80........... 3.09 Lviv Venture capital availability..................................................................................... 11................2.30.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 12................4.87.........................+......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 8.................3.35.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness........................................................................................................ 9........................3.14...................................+................................3.11.................4.38 Kyiv Availability of latest technologies........................................................................... 6.................3.80.........................+......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 15................4.29.........................+......................4.29........... 4.72 Donetsk FDI and technology transfer................................................................................... 1.................4.77.........................+......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 26...............22.40........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 22................3.98.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 14..............125.73.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 27...............14.12........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................14......................2.05...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 16................1.76.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 12................2.91.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................26......................3.80...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 26................4.36.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 21................4.13.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 14................3.80.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 27................3.11.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 25................3.10.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 24................4.36.........................-.......................4.63........... 5.14 Sumy Production process sophistication......................................................................... 4.................3.68.........................+......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 25................3.81.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority........................................................................... 7.................3.74.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 ............................................................. 25................4.01.........................-.......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................24......................2.84...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 20................3.98.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 22................3.02.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 27................2.45.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 26................2.50.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products................................ 6.................3.31.........................+......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 16................3.34.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*................................................................... 6.................2.45.........................+......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 10................3.29.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Zakarpattya

223

Key indicators Population (m), 2012................................................................................1.79 Gross Regional Product (UAH m), 2011...............................................49,525 GRP per capita (UAH), 2011.................................................................27,567 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................3.8

Competitiveness Profiles

Zaporizhzhya

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013........................................................................................8.........4.03 Basic requirements.......................................................................................................... 15......... 4.41 Institutions.......................................................................................22......3.74 Infrastructure.....................................................................................8......4.09 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................24......5.61 Efficiency enhancers..........................................................................................................8.........3.83 Higher education and training............................................................4......4.89 Goods market efficiency .................................................................21......4.06 Labor market efficiency...................................................................23......4.57 Financial market development...........................................................9......4.17 Technological readiness...................................................................24......2.90 Market size......................................................................................10......2.37

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 10.........3.51 Business sophistication ....................................................................6......4.02 Innovation........................................................................................15......3.00 Zaporizhzhya

225

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Zaporizhzhya

Regions average

Tax regulations........................................................................................ 16.3%................13.8% Policy instability...................................................................................... 14.3%................16.9% Tax rates................................................................................................. 12.9%................10.0% Corruption............................................................................................... 11.3%................11.3% Inefficient government bureaucracy........................................................ 10.5%..................9.9% Local and national government instability................................................ 7.6%..................6.8% Inadequately educated workforce............................................................. 6.5%..................4.8% Access to financing................................................................................... 4.6%..................6.5% Inflation..................................................................................................... 4.5%..................6.5% Inadequate supply of infrastructure.......................................................... 3.1%..................4.1% Access to land plots ................................................................................. 2.9%..................2.4% Restrictive labour regulations................................................................... 2.2%..................2.1% Crime and theft......................................................................................... 1.7%..................1.3% Regional customs policy........................................................................... 1.3%..................2.0% Foreign currency regulations.................................................................... 0.4%..................1.6%

Zaporizhzhya

10%

15%

20%

Regions average

Competitiveness Profiles 226

Zaporizhzhya Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Кращий регіон

Competitiveness Index 2013...................................................................................................................... 8........................4.03...................................+................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................15......................4.41...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers........................................................................................................... 8........................3.83...................................+................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................10......................3.51...................................+................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................22......................3.74...................................-.................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 20................4.41.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ........................................................................ 17................3.21.........................-.......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 23................3.39.........................-.......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 18................2.48.........................-.......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 17................3.99.........................-.......................4.02........... 4.46 Chernihiv Judicial independence.......................................................................................... 21................2.76.........................-.......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials.................................................... 17................2.99.........................-.......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 22................3.77.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 20................3.11.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 26................2.88.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 26................2.84.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking........................................................... 4.................5.03.........................+......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 7.................6.49.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence................................................................... 22................4.56.........................-.......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 26................4.39.........................-.......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 19................3.98.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 12................3.60.........................+......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards.................................................................................. 2.................5.40.........................+......................5.11........... 5.44 Donetsk Protection of minority shareholders’ interests...................................................... 22................3.26.........................-.......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0–10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure................................................................................................................................ 8........................4.09...................................+................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 10................4.54.........................+......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 10................3.54.........................+......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 16................4.87.........................+......................4.86........... 5.51 Kharkiv Quality of port infrastructure.................................................................................. 8.................3.69.........................+......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 13................3.05.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*.......................................... 7.................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply.................................................................................... 8.................4.99.........................+......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 21..............110.91.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 3................29.26........................+.....................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................24......................5.61...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 13................4.44.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 18...............69.50........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................. 6.................5.54.........................+......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 15................0.33.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 17................8.30.........................-.......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 14...............70.95........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 21................3.88.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 25...............90.90........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training............................................................................................ 4........................4.89...................................+................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*................................................... 8................98.60........................+.....................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*........................................................ 4................81.85........................+.....................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 20................3.94.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 23................4.10.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 15................3.23.........................+......................3.22........... 3.77 Kyiv Internet access in schools...................................................................................... 9.................4.80.........................+......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................. 7.................4.75.........................+......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 4.................3.23.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................21......................4.06...................................-.................................4.12.................4.26 Odesa Intensity of local competition................................................................................ 10................4.64.........................+......................4.55........... 4.90 Kyiv Extent of market dominance................................................................................. 24................3.54.........................-.......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 18................3.29.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest.............................................................. 22................3.14.........................-.......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 17................3.39.........................-.......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers................................................................................... 8.................4.32.........................+......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Кращий регіон

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 12................2.85.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................ 21................3.93.........................-.......................4.10........... 4.80 Sumy Burden of customs procedures............................................................................. 20................3.73.........................-.......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*.......................................................................... 8................32.29........................+.....................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................ 26................4.77.........................-.......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 13................3.73.........................+......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.........................................................................................................23......................4.57...................................-.................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations................................................................ 2.................5.05.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination.......................................................................... 17................5.12.........................-.......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 13................4.48.........................+......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................ 21................2.94.........................-.......................3.11........... 3.51 Chernihiv Pay and productivity............................................................................................. 23................4.89.........................-.......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 5.................4.35.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 11................2.76.........................+......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 27................2.03.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men.................................................. 14................0.85.........................-.......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development........................................................................................... 9........................4.17...................................+................................4.12.................4.26 Sumy Availability of financial services............................................................................. 6.................5.15.........................+......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 14................4.40.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 12................2.78.........................+......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 19................2.73.........................-.......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 1.................2.39.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 20................4.81.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges........................................................................ 9.................3.33.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................24......................2.90...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 25................3.20.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 24................4.09.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 27................2.96.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*.................................................................................................. 7................34.72........................+.....................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*................................................ 5.................7.45.........................+......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 21..............110.91.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ........................................................................ 3................29.26........................+.....................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................10......................2.37...................................+................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 11................1.99.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*.................................................................. 5.................3.53.........................+......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ..................................................................................................... 6........................4.02...................................+................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 14................4.71.........................+......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................. 7.................4.29.........................+......................4.19........... 4.39 Donetsk State of cluster development................................................................................. 8.................4.34.........................+......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 20................3.34.........................-.......................3.51........... 3.99 Sumy Value chain breadth............................................................................................... 2.................3.74.........................+......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 21................4.50.........................-.......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 23................3.21.........................-.......................3.43........... 3.80 Rivne Extent of marketing................................................................................................ 7.................4.22.........................+......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 10................3.69.........................+......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 5.................4.35.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................15......................3.00...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 27................3.64.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 13................3.73.........................+......................3.63........... 4.83 Kharkiv Company spending on R&D................................................................................... 8.................2.93.........................+......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 11................3.13.........................+......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 27................2.70.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 11................3.71.........................+......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 14................1.10.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ........................................................................ 17................3.21.........................-.......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Zaporizhzhya

227

Key indicators Population (m), 2012................................................................................1.27 Gross Regional Product (UAH m), 2011...............................................21,928 GRP per capita (UAH), 2011.................................................................17,184 Share in Ukraineâ&#x20AC;&#x2122;s GDP (%), 2011..............................................................1.7

Competitiveness Profiles

Zhytomyr

Competitiveness Index 2013 Rank Score (out of 27)

Institutions

Competitiveness Index 2013.....................................................................................25.........3.88 Basic requirements.......................................................................................................... 27......... 4.27 Institutions.......................................................................................12......3.84 Infrastructure...................................................................................26......3.38 Macroeconomic environment............................................................1......4.20 Health and primary education..........................................................21......5.64 Efficiency enhancers.......................................................................................................20.........3.69 Higher education and training..........................................................20......4.35 Goods market efficiency .................................................................11......4.16 Labor market efficiency.....................................................................5......4.72 Financial market development.........................................................19......4.09 Technological readiness...................................................................22......2.93 Market size......................................................................................19......1.90

Infrastructure

Innovation 7 6

Business sophistication

Macroeconomic environment

5 4 3 2

Market size

Health and primary education

Technological readiness

Higher education and training

Financial market development Labor market efficiency

Innovation and sophistication factors................................................................. 27.........3.23 Business sophistication ..................................................................27......3.79 Innovation........................................................................................27......2.67 Zhytomyr

229

Goods market efficiency

Regions average

The most problematic factors for doing business, number of answers in % Zhytomyr

Regions average

Policy instability...................................................................................... 16.2%................16.9% Tax regulations........................................................................................ 14.5%................13.8% Tax rates................................................................................................. 11.2%................10.0% Corruption................................................................................................. 9.7%................11.3% Inefficient government bureaucracy.......................................................... 9.5%..................9.9% Local and national government instability................................................ 9.0%..................6.8% Inflation..................................................................................................... 8.1%..................6.5% Access to financing................................................................................... 6.0%..................6.5% Inadequately educated workforce............................................................. 4.1%..................4.8% Inadequate supply of infrastructure.......................................................... 3.9%..................4.1% Access to land plots ................................................................................. 2.2%..................2.4% Crime and theft......................................................................................... 1.9%..................1.3% Restrictive labour regulations................................................................... 1.7%..................2.1% Foreign currency regulations.................................................................... 1.3%..................1.6% Regional customs policy........................................................................... 0.6%..................2.0%

Zhytomyr

10%

15%

20%

Regions average

Competitiveness Profiles 230

Zhytomyr Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Кращий регіон

Competitiveness Index 2013.....................................................................................................................25......................3.88...................................-.................................4.01.................4.40 Kyiv Subindex A: Basic requirements.............................................................................................................27......................4.27...................................-.................................4.42.................4.63 Kyiv Subindex B: Efficiency enhancers..........................................................................................................20......................3.69...................................-.................................3.79.................4.36 Kyiv Subindex C: Innovation and sophistication factors.....................................................................27......................3.23...................................-.................................3.50.................3.91 Kharkiv

A.01 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21

1st pillar: Institutions......................................................................................................................................12......................3.84...................................+................................3.83.................4.00 Khmelnytsky Property rights...................................................................................................... 21................4.40.........................-.......................4.49........... 4.75 Zakarpattya Intellectual property protection 1/2 ......................................................................... 9.................3.31.........................+......................3.24........... 3.44 Vinnytsya Diversion of public funds...................................................................................... 10................3.84.........................+......................3.65........... 4.20 Poltava Public trust in politicians...................................................................................... 11................2.58.........................+......................2.54........... 2.91 Kirovohrad Irregular payments and bribes.............................................................................. 12................4.09.........................+......................4.02........... 4.46 Chernihiv Judicial independence........................................................................................... 7.................3.10.........................+......................2.92........... 3.28 Chernihiv Favoritism in decisions of government officials..................................................... 3.................3.36.........................+......................3.05........... 3.59 Volyn Wastefulness of government spending................................................................. 13................3.87.........................-.......................3.95........... 4.46 Volyn Burden of government regulation......................................................................... 16................3.21.........................-.......................3.27........... 3.94 Chernivtsi Efficiency of legal framework in settling disputes................................................. 20................2.97.........................-.......................3.07........... 3.37 Volyn Efficiency of legal framework in challenging regulations...................................... 15................3.10.........................-.......................3.10........... 3.47 Chernivtsi Transparency of government policymaking.......................................................... 27................4.53.........................-.......................4.83........... 5.13 Khmelnytsky Business costs of terrorism................................................................................... 9.................6.42.........................+......................6.36........... 6.62 Kirovohrad Business costs of crime and violence.................................................................... 5.................4.88.........................+......................4.75........... 5.18 Ternopil Organized crime.................................................................................................... 13................5.10.........................+......................5.01........... 5.59 Ternopil Reliability of police services.................................................................................. 22................3.87.........................-.......................4.11........... 4.50 Ternopil Ethical behavior of firms....................................................................................... 16................3.53.........................-.......................3.58........... 3.84 Donetsk Strength of auditing and reporting standards........................................................ 1.................3.72.........................=......................3.72........... 3.72 Multiple (27) Efficacy of corporate boards................................................................................. 24................4.92.........................-.......................5.11........... 5.44 Donetsk Protection of minority shareholders’ interests...................................................... 12................3.44.........................+......................3.43........... 3.78 Khmelnytsky Strength of investor protection, 0–10 (best)*........................................................ 1.................4.70.........................=......................4.70........... 4.70 Multiple (27)

A.02 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09

2nd pillar: Infrastructure...............................................................................................................................26......................3.38...................................-.................................3.90.................5.12 Kyiv Quality of overall infrastructure............................................................................. 24................4.09.........................-.......................4.41........... 4.91 Kharkiv Quality of roads..................................................................................................... 14................3.28.........................-.......................3.39........... 4.68 Sevastopol Quality of railroad infrastructure........................................................................... 25................4.43.........................-.......................4.86........... 5.51 Kharkiv Quality of port infrastructure................................................................................. 16................2.18.........................-.......................2.80........... 5.06 Odesa Quality of air transport infrastructure.................................................................... 27................1.46.........................-.......................3.06........... 5.73 Kyiv Available airline seat kilometers, kms/week, millions*......................................... 10................1.00.........................-.......................1.03........... 1.37 Kyiv Quality of electricity supply................................................................................... 27................4.07.........................-.......................4.74........... 5.22 Rivne Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 18..............115.58.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 13...............21.40........................-......................24.21........ 67.97 Odesa

A.03

A.04 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10

4th pillar: Health and primary education...........................................................................................21......................5.64...................................-.................................5.75.................5.97 KyivOblast Business impact of malaria...................................................................................n/a................n/a..........................=.......................n/a...............n/a Multiple (27) Malaria incidence/100,000 pop.*..........................................................................n/e................n/e..........................=.......................n/e.............. n/e Multiple (27) Business impact of tuberculosis........................................................................... 26................4.03.........................-.......................4.46........... 4.95 Sevastopol Tuberculosis incidence/100,000 pop.*................................................................. 17...............69.20........................-......................66.91........ 41.00 Kyiv Business impact of HIV/AIDS................................................................................ 26................5.16.........................-.......................5.39........... 5.75 Sumy HIV prevalence, % adult pop.*.............................................................................. 14................0.32.........................+......................0.43........... 0.04 Zakarpattya Infant mortality, deaths/1,000 live births*............................................................ 12................8.00.........................+......................8.13........... 5.20 Sevastopol Life expectancy, years*......................................................................................... 21...............69.85........................-......................71.13........ 74.15 Kyiv Quality of primary education................................................................................. 25................3.75.........................-.......................3.96........... 4.37 Chernivtsi Primary education enrollment rate, net %*.......................................................... 16...............93.00........................-......................94.00...... 100.00 Multiple (2)

B.05 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08

5th pillar: Higher education and training...........................................................................................20......................4.35...................................-.................................4.55.................5.28 Kharkiv Secondary education enrollment rate, gross %*.................................................. 15...............95.10........................-......................96.07...... 100.00 Multiple (6) Tertiary education enrollment rate, gross %*....................................................... 18...............48.95........................-......................65.50.... >100.00 Multiple (2) Quality of the educational system......................................................................... 16................4.02.........................-.......................4.06........... 4.55 Kharkiv Quality of math and science education................................................................. 25................4.06.........................-.......................4.29........... 4.76 Chernivtsi Quality of management schools............................................................................ 22................2.93.........................-.......................3.22........... 3.77 Kyiv Internet access in schools..................................................................................... 20................4.68.........................-.......................4.76........... 5.22 Sevastopol Local availability of specialized research and training services............................ 21................4.40.........................-.......................4.62........... 5.51 Kharkiv Extent of staff training............................................................................................ 5.................3.22.........................+......................3.08........... 3.44 Donetsk

B.06 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10

6th pillar: Goods market efficiency ......................................................................................................11.......................4.16...................................+................................4.12.................4.26 Odesa Intensity of local competition................................................................................. 7.................4.78.........................+......................4.55........... 4.90 Kyiv Extent of market dominance.................................................................................. 2.................4.41.........................+......................3.99........... 4.69 Ivano-Frankivsk Effectiveness of anti-monopoly policy.................................................................. 12................3.37.........................-.......................3.40........... 4.01 Sumy Effect of taxation on incentives to invest............................................................... 7.................3.41.........................+......................3.32........... 3.78 Chernihiv Total tax rate, % profits* 1/2 ................................................................................... 1................55.40........................=.....................55.40........ 55.40 Multiple (27) Number of procedures required to start a business (days)*.................................. 1................... 7...........................=........................ 7................... 7 Multiple (27) Time required to start a business*......................................................................... 1.................. 22..........................=....................... 22................ 22 Multiple (27) Agricultural policy costs........................................................................................ 10................3.54.........................+......................3.43........... 3.78 Vinnytsya Prevalence of trade barriers.................................................................................. 14................4.13.........................-.......................4.22........... 4.95 Kherson Trade tariffs, % duty*............................................................................................. 1.................2.87.........................=......................2.87........... 2.87 Multiple (27)

Ukraine National Competitiveness Index 2013 Indicator

Rank/27

Score

Comparing to average

Regions average

Кращий регіон

6.11 6.12 6.13 6.14 6.15 6.16

Prevalence of foreign ownership........................................................................... 18................2.78.........................-.......................2.96........... 3.98 Kyiv Business impact of rules on FDI............................................................................. 7.................4.19.........................+......................4.10........... 4.80 Sumy Burden of customs procedures.............................................................................. 4.................4.24.........................+......................3.88........... 4.43 Chernivtsi Imports as a percentage of GDP*......................................................................... 24...............12.47........................-......................30.38........ 92.36 Kyiv Degree of customer orientation............................................................................. 2.................5.17.........................+......................4.93........... 5.42 Chernivtsi Buyer sophistication............................................................................................. 16................3.63.........................-.......................3.70........... 3.99 Odesa

B.07 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10

7th pillar: Labor market efficiency.......................................................................................................... 5........................4.72...................................+................................4.63.................4.80 Khmelnytsky Cooperation in labor-employer relations............................................................... 11................4.96.........................+......................4.87........... 5.08 Kharkiv Flexibility of wage determination........................................................................... 8.................5.26.........................+......................5.17........... 5.52 Kyiv Hiring and firing practices..................................................................................... 21................4.40.........................-.......................4.45........... 4.68 Ivano-Frankivsk Redundancy costs, weeks of salary*..................................................................... 1.................. 13..........................=....................... 13................ 13 Multiple (27) Effect of taxation on incentives to work................................................................. 9.................3.23.........................+......................3.11........... 3.51 Chernihiv Pay and productivity.............................................................................................. 4.................5.27.........................+......................5.07........... 5.41 Khmelnytsky Reliance on professional management 1/2 .............................................................. 3.................4.42.........................+......................4.19........... 4.50 Rivne Country capacity to retain talent........................................................................... 21................2.51.........................-.......................2.72........... 3.14 Kyiv Country capacity to attract talent.......................................................................... 21................2.27.........................-.......................2.67........... 4.21 Kyiv Female participation in labor force, ratio to men................................................... 5.................0.92.........................+......................0.86........... 0.95 Rivne

B.08 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08

8th pillar: Financial market development..........................................................................................19......................4.09...................................-.................................4.12.................4.26 Sumy Availability of financial services............................................................................ 22................4.82.........................-.......................4.98........... 5.26 Kharkiv Affordability of financial services.......................................................................... 13................4.42.........................+......................4.38........... 4.68 Sumy Financing through local equity market.................................................................. 15................2.75.........................-.......................2.78........... 3.12 Dnipropetrovsk Ease of access to loans......................................................................................... 15................2.83.........................+......................2.80........... 3.09 Lviv Venture capital availability...................................................................................... 3.................2.36.........................+......................2.22........... 2.39 Zaporizhzhya Soundness of banks.............................................................................................. 23................4.60.........................-.......................4.82........... 5.18 Khmelnytsky Regulation of securities exchanges....................................................................... 14................3.22.........................+......................3.22........... 3.82 Sumy Legal rights index, 0–10 (best)*............................................................................ 1.................9.00.........................=......................9.00........... 9.00 Multiple (27)

B.09 9.01 9.02 9.03 9.04 9.05 9.06 9.07 2.08 2.09

9th pillar: Technological readiness.......................................................................................................22......................2.93...................................-.................................3.11.................4.38 Kyiv Availability of latest technologies.......................................................................... 21................3.38.........................-.......................3.58........... 4.21 Donetsk Firm-level technology absorption.......................................................................... 18................4.21.........................-.......................4.29........... 4.72 Donetsk FDI and technology transfer.................................................................................. 17................3.77.........................-.......................3.84........... 4.77 Zakarpattya Internet users, %*................................................................................................. 23...............25.10........................-......................32.13........ 82.31 Kyiv Fixed broadband Internet subscriptions/100 pop.*............................................... 25................3.81.........................-.......................6.83......... 35.22 Kyiv Internet bandwidth, kb/s per user*........................................................................ 1................14.33........................=.....................14.33........ 14.33 Multiple (27) Mobile broadband subscriptions/100 pop.*.......................................................... 1.................5.50.........................=......................5.50........... 5.50 Multiple (27) Mobile telephone subscriptions/100 pop.* 1/2 ...................................................... 18..............115.58.......................-.....................126.70..... 243.17 Kyiv Fixed telephone lines/100 pop.* 1/2 ....................................................................... 13...............21.40........................-......................24.21........ 67.97 Odesa

B.10 10.01 10.02

10th pillar: Market size..................................................................................................................................19......................1.90...................................-.................................2.21.................3.71 Kyiv Domestic market size index, 1–7 (best)*.............................................................. 17................1.74.........................-.......................1.99........... 3.51 Kyiv Foreign market size index, 1–7 (best)*................................................................. 20................2.38.........................-.......................2.86........... 4.30 Kyiv

C.11 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 7.07

11th pillar: Business sophistication ....................................................................................................27......................3.79...................................-.................................3.96.................4.25 Donetsk Local supplier quantity.......................................................................................... 19................4.55.........................-.......................4.71........... 5.20 Donetsk Local supplier quality............................................................................................ 26................3.94.........................-.......................4.19........... 4.39 Donetsk State of cluster development................................................................................ 26................3.23.........................-.......................3.93........... 5.28 Donetsk Nature of competitive advantage........................................................................... 15................3.44.........................-.......................3.51........... 3.99 Sumy Value chain breadth.............................................................................................. 23................3.24.........................-.......................3.43........... 4.17 Kharkiv Control of international distribution...................................................................... 10................4.67.........................+......................4.63........... 5.14 Sumy Production process sophistication........................................................................ 19................3.29.........................-.......................3.43........... 3.80 Rivne Extent of marketing............................................................................................... 19................3.95.........................-.......................4.08........... 4.66 Donetsk Willingness to delegate authority.......................................................................... 22................3.44.........................-.......................3.61........... 3.98 Sumy Reliance on professional management 1/2 .............................................................. 3.................4.42.........................+......................4.19........... 4.50 Rivne

C.12 12.01 12.02 12.03 12.04 12.05 12.06 12.07 1.02

12th pillar: Innovation....................................................................................................................................27......................2.67...................................-.................................3.04.................3.60 Kharkiv Capacity for innovation......................................................................................... 23................3.92.........................-.......................4.03........... 4.25 Volyn Quality of scientific research institutions.............................................................. 27................2.43.........................-.......................3.63........... 4.83 Kharkiv Company spending on R&D.................................................................................. 24................2.59.........................-.......................2.85........... 3.33 Sumy University-industry collaboration in R&D.............................................................. 24................2.60.........................-.......................3.01........... 3.95 Kharkiv Government procurement of advanced technology products............................... 18................2.96.........................-.......................3.07........... 3.53 Volyn Availability of scientists and engineers................................................................. 27................2.83.........................-.......................3.56........... 4.62 Kharkiv PCT patent applications/million pop.*.................................................................. 11................1.26.........................-.......................2.12......... 13.90 Kyiv Intellectual property protection 1/2 ......................................................................... 9.................3.31.........................+......................3.24........... 3.44 Vinnytsya

Notes:

Competitiveness Profiles

Zhytomyr

231

Charitable Foundation for Effective Governance

The Foundation established in 2007 to develop and implement projects and programs focused on the long-term development of the Ukrainian economy and to further public debate on the most important economic challenges facing Ukraine. FEG is a nonprofit, independent organization serving the interests of Ukrainian citizens. FEG’s initiatives are focused on practical results, therefore, it actively cooperates with the government at all levels during the development and realization of its projects and programs. One of FEG’s fundamental principles is to engage top international experts. Each project is carried out in partnership with leading international organizations that have extensive expertise in solving similar challenges. International experts in close cooperation with Ukrainian specialists directly interact with the appropriate State authorities to take into account the best world practice as well as the features of the Ukrainian economy. 232

Currently, FEG concentrates on the following projects: assisting the State authorities in developing and implementing economic reforms, annual study of the competitiveness of Ukraine’s regions, review and analysis of international indices and ratings, development of economics journalism in Ukraine, and public debates on important topics of economic and business development in Ukraine. Detailed information can be found on the website of the Foundation: www.feg.org.ua Competitiveness web-portal of Ukraine: competitiveukraine.org Public debates web-site: www.debaty.org ImpactMedia web-site: www.impactmedia.com.ua