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Innovation for economic resilience: Strengthening Ukraine's human capital and science sector

Ukraine’s science and innovation sector has suffered significant setbacks since the full-scale Russian invasion in 2022, yet it remains an essential pillar for the country’s future economic resilience. This column discusses several priority areas for policies to support the sector in Ukraine, with a key focus on the development of human capital, international collaboration, and regional innovation, so that it can be a driver of economic recovery.

Innovation is essential for economic growth and resilience, and its importance is particularly evident in Ukraine today. On the battlefield, cutting-edge advances in defence and healthcare technologies have played a pivotal role in Ukraine’s defence efforts, underscoring the crucial impact of innovation in times of crisis. These innovations, however, build upon prior advances in more fundamental, or basic, science. For example, fundamental research across a range of fields, including aerodynamics, control theory, and wireless communication (and many others), has made modern drone technology possible.

Ukraine’s science and innovation sector has suffered significant setbacks since the full-scale Russian invasion in 2022, yet it remains an essential pillar for the country’s future economic resilience. Recent research underscores the importance of investing in human capital and in fundamental research for innovation and economic growth. This research points to the critical role of public R&D in fostering long-term employment productivity (Kantor and Whalley 2023, Babina et al. 2023, Dyevre 2024), including during wartime (Gross and Sampat 2023) – highlighting its importance for Ukraine as it navigates war and post-war recovery.

In a new CEPR Policy Insight (Bezvershenko et al. 2025) we stress that attention to fundamental research is a critical foundation for effective innovation and economic policy.

We discuss several priority areas for policies to support the science and innovation sector in Ukraine, with a key focus on the development of human capital, international collaboration, and regional innovation, so that it can be a driver of economic recovery.

Development of human capital: Sustaining Ukraine’s scientific workforce 

Ukraine has long been recognised for its strong scientific tradition, however threats to human capital since the full-scale invasion include emigration, direct death and trauma caused by the war, and occupational mobility into other sectors (Gorodnichenko et al. 2022). While it is challenging to know exact numbers, by the end of 2022, an estimated 10% of Ukraine’s researchers had left the country (De Rassenfosse et al. 2023, Ganguli and Waldinger 2023a, 2023b, Lutsenko et al. 2023). Evidence from WWII suggests that such brain drain has significant long-term negative impacts on national science and innovation systems (Waldinger 2016), yet other evidence shows that post-war investments in areas most impacted by war could even lead to higher rates of innovation (Bergeaud and Chaniot 2024).

To counteract the potential negative impacts, Ukraine should prioritise retaining and attracting scientific talent. In the short run, funding for scientists to continue their research, even in small amounts, is critical. Evidence from the economic crisis in the 1990s after the end of the USSR suggests that even a small amount can help scientists continue to do their research (Ganguli 2017). Other measures include extending income tax exemptions on international research grants and facilitating short-term research placements abroad. In the long run, targeted fellowships and competitive research grants can encourage the return of Ukrainian scientists and attract foreign expertise. China’s Thousand Talents Plan, despite its geopolitical controversies, demonstrates how strategic incentives can successfully repatriate scientists from abroad (Shi et al. 2023). A similar model, adapted to Ukraine’s needs, could help rebuild its scientific workforce.

In the meantime, migrants and the larger Ukrainian diaspora can be engaged in scientific collaborations, and their expertise can be used for policy input and advising (e.g. Dombrovskis et al. 2024).

Integration into international scientific community: Leveraging funding and Ukraine’s strengths

While integration with the global scientific community has improved over the past decade, Ukraine remains under-represented in international research initiatives. Less than 10% of papers published by a Ukrainian coauthor had a coauthor from a Western country in recent years, although there is heterogeneity across fields. Some fields like physics and medicine have had a relatively high share of papers with international coauthors, with more than 20% of papers in some years with an international team; others, like engineering, have been low. Ukraine’s top partners in international scientific collaborations are shown in Figure 1.  The decline in collaborations with Russia beginning in 2014 and an increase in collaborations with Poland and Germany is evident in recent years (also see the discussion Van Noorden 2023).

Participation in EU programmes like Horizon Europe has increased, yet Ukrainian institutions received only 0.12% of total Horizon Europe funding as of 2024. Strengthening partnerships with European and North American institutions through co-financed research grants and diaspora engagement is crucial for accessing knowledge networks and financial resources. Given the significant challenges Ukraine faces during the war and its recovery phase, all eligible organizations should actively pursue opportunities in Horizon Europe.

Figure 1 Ukraine’s top partners for international collaborations: Share of international papers coauthored with partner country

Figure 1 Ukraine’s top partners for international collaborations: Share of international papers coauthored with partner country

Source: Scopus Publication Database

Ukraine’s expertise in defence and healthcare technologies, developed under wartime conditions, also presents an opportunity for international cooperation. There are many examples in the US and around the world where investments in defence-related R&D have led to the commercialisation of defence technologies for civilian use and increases in entrepreneurship and employment (e.g. Gross and Sampat 2023). Encouraging similar technology transfer programs in Ukraine can enhance its position in global markets while fostering local entrepreneurship.

Regional innovation development: Hubs and partnerships

Most of Ukraine’s scientific activity has historically been concentrated in Kyiv, but also other areas like Kharkiv that have been heavily affected by the war. To ensure economic resilience, Ukraine must maintain and rebuild these centres of science and innovation, but also adopt a regional innovation strategy that fosters research and development in other areas as well.

Developing regional science and technology hubs, such as those introduced recently in the US National Science Foundation’s Regional Innovation Engines, can facilitate collaboration between universities, businesses, and local governments. Such initiatives not only attract investment but also create local employment opportunities and prevent further brain drain. One promising example of such an initiative is the UC Berkeley-Ukraine Innovation Hubs, a network of innovation centres being developed in key industry and research centres across Ukraine in collaboration with UC Berkeley, the AI for Good Foundation, the Ukrainian Ministry of Education and Science, the Ukrainian Ministry of Economy, KSE, Kyiv-Mohyla Academy, and a variety of local academic and international stakeholders. Each hub is adapted to the needs, realities, and potential of the region in which it is located.

Lastly, tax incentives for industry-university partnerships, as well as streamlined regulations for research commercialisation, can accelerate knowledge transfer. Developing new tax incentives, and supporting current initiatives such as the proposed special tax regime for research in science parks (Diia.City - Science.City) outlined in the government's Priority Action Plan for 2024, can incentivise and stimulate scientific and innovation activities in these locations.

Conclusion

Ukraine’s economic recovery depends on policies that will support the science and innovation sector. Retaining and developing human capital, fostering international research collaboration, and decentralizing innovation efforts through regional hubs are essential steps toward this goal. By implementing targeted policies in these areas, Ukraine can not only rebuild its scientific ecosystem but also emerge as a leader in strategic technological fields. A proactive approach in the short-term can ensure that Ukraine’s science innovation sector contributes to long-term economic resilience and growth.

References

Babina, T, A X He, S T Howell, E R Perlman, and J.Staudt (2023), “Cutting the innovation engine: how federal funding shocks affect university patenting, entrepreneurship, and publications”, Quarterly Journal of Economics 138(2): 895-954.

Bergeaud, A and J B Chaniot (2024), “The missing workers: Innovation and demographics after World War I”, mimeo.

Bezvershenko, Y, I Ganguli, O Talavera and Y Gorodnichenko (2025), “Innovation for Economic Resilience: Strengthening Ukraine’s Human Capital and Science Sector”, CEPR Policy Insight 138.

De Rassenfosse, G, T Murovana and W H Uhlbach (2023), “The effects of war on Ukrainian research”, Humanities and Social Sciences Communications 10(1): 1-11.

Dombrovskis, V, M Obstfeld, I Sologoub, Y Gorodnichenko, T Becker, A Fedyk, G Roland, and B Weder di Mauro (2024), “Stimulating growth in Ukraine and policies for migrants’ return”, VoxEU.org, 13 June.

Dyevre, A (2024), “Public R&D spillovers and productivity growth”, mimeo.

Ganguli, I (2017), “Saving Soviet science: The impact of grants when government R&D funding disappears”, American Economic Journal: Applied Economics 9(2): 165-201.

Ganguli, I and F Waldinger (2024), “War and Science in Ukraine”, Entrepreneurship and Innovation Policy and the Economy 3(1): 165-188.

Ganguli, I and F Waldinger (2023b), “The impact of the war in Ukraine on science and universities”, VoxEU.org, 22 August.

Gorodnichenko, Y, M Kudlyak, and A Sahin (2024), “The effect of the war on human capital in Ukraine and the path for rebuilding", CEPR Policy Insight 117.

Gross, D P and B N Sampat (2023), “America, jump-started: World War II R&D and the takeoff of the US innovation system”, American Economic Review 113(12): 3323-3356.

Kantor, S and A T Whalley (2023), “Moonshot: Public R&D and growth”, NBER Working Paper No. w31471, forthcoming in American Economic Review.

Lutsenko, A, N Harashchenko, L Hladchenko, N Korytnikova, R Moskotina and O Pravdyva (2023), “The Results of The Survey on The Needs of Ukrainian Scientists (First Wave Report)”, Max Planck Institute for Innovation & Competition Research Paper No. 23-03.

Shi, D, W Liu, and Y Wang (2023), “Has China’s young thousand talents program been successful in recruiting and nurturing top-caliber scientists?”, Science 379(6627): 62–65.

Van Noorden, R (2023), “Data hint at Russia’s shifting science collaborations”, Nature 615: 199.

Waldinger, F (2016), “Bombs, Brains, and Science: The Role of Human and Physical Capital for the Creation of Scientific Knowledge”, Review of Economics and Statistics 98(5): 811-831.