Anastasiya DragumirovaPetro Mohyla Black Sea State University

Kyiv School of Economics2016

CONCEPT OF CREATIVE ECONOMY AND PROSPECTS

OF ITS DEVELOPMENT IN UKRAINE

Motivation Creative economy helps:

Improving the quality of life favorable environment for citizens’ self-realization improving the country's competitiveness

It is relevant for Ukraine to understand the reasons why creative sector is not developing as successfully

Literature

Richard E. Caves (2000) – organization of creative industries

J. Hawkins (2001) – introduction of “creative economy” as a concept

G. Florida (2002) – investigation of the “creative class” as the basis of creative economy

Share of creative sector in foreign trade of Ukraine

Foreig Trade; 98.9%

Share of Creative Sector; 1.1%

2008

Foreig TradeShare of Creative Sector

Foreig Trade98.7%

Share of Creative Sector0.013

2012

Foreig TradeShare of Creative Sector

2008 20120.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Creative Industries Foreign Trade in Ukraine

Share in TE Share in TI

Development of creative economy in Ukraine

Global Innovation Index: 64th rank out of 141 (2015)Human Capital Index: 31st rank out of 124 (2015)Network Readiness Index: 71st rank out of 143 (2015)Global Competitiveness Index: 79th rank out of 140 (2015)

Global Innovation Index

Political Environ-

ment

(0.21)

Legal Environment

(0.37)

Ease of running business

(0.35)

Infra-structure (0.21)

Market Conditions

(0.37)

Human capital (0.75)

64th out of

141

31st out of

124Human Capital Index

Ukraine is included in the top 10 countries by - the number of people with primary education- the number of people with secondary education

7th place in the “Top 10 Countries With the Most Graduates in Engineering, Manufacturing and Construction”

People who stay in

Ukraine33%

People who go abroad

67%

Ukraine’s Capacity to Retain Talents

Development of ICT in Ukraine

71st out of

143Network Readiness Index

Subindex Meaning (max 7) Ranking Position (max 143)

A. Environmental 3.6 104

B. Readiness 5.6 28

C. Usage 3.4 94

D. Impact 3.5 82

Global Competitiveness Index79th out of

140

20042005

20062007

20082009

20102011

20122013

20140

102030405060708090 Depreciation of fixed assets

Source: http://www.ukrstat.gov.ua/operativ/operativ2007/ibd/voz/voz_u/voz06_u.htm

Macro level:Coordination failure theory

Coordination failure in Ukraine may be explained by several factors:

absence of developed infrastructure (development of information and communication technologies, general infrastructure (electricity output, logistics performance)

unfavorable political environment (political stability and government effectiveness)

imperfection of legal base and hardships in doing business

inefficient education system

Micro level:O-Ring Theory

This theory of development explains low level of creative sector activity by existence of a certain weak link in the production process

High-qualified specialists - weak link because they are not motivated to stay here

Recommendations

• improvement of property right specification and its protection

• reduction of the administrative and bureaucratic barriers for creating new enterprises

• provision of tax benefits for companies dealing with innovative technologies

• creation of the government body to focus on the strategies of development and growth of creative sector in Ukraine

Conclusions

Ukraine has the basis for creative economy development (creative class) but

Creative sector is still not developed well in Ukraine

Coordination theory can explain the slow growth of creative sector:

The problems of the creative economy appear mostly because of the fails in legal basis and inefficient government policies.