Kurchenko Olena

post-graduate

Institute for Economics and Forecasting

Kyiv

SUPPORT POLICY OF INNOVATIVE START-UP IN OECD

The necessity of solving socio-economic problems of society motivated OECD in 1998 year to make recommendations to OECD countries. One of the recommendations made to OECD governments was to implement mechanisms of the organization and development start-ups [2, p. 8]. Since that time the role of innovative entrepreneurship was highly increased. One of the most advanced types of start-ups with technological development is innovative-start-ups.

Innovative start-ups - recently founded or growth-stage enterprises that carry out R&D activities, with low overheads and a potential for fast growth, they build their competitive advantage on innovations arising from research and development. Converting their ideas into commercial applications depends largely on cooperation among research centers, universities and the private sector, as well as a set of support measures put in place by government agencies [1, p. 46-47].

The increased attention from countries with developed innovation systems to new participants in the market - innovative start-ups is due to the positive impact of these companies on economic development. They, in particular, relates to:

• creation of new jobs and the reduction of unemployment;
• increased competition;
• enhanced innovation and new technology and accelerated structural change in the economy;
• is a way of eliminating regional economic disadvantages [2, с. 8-9].

Stimulating structural changes of the economy, innovative start-ups lead to rapid economic growth and reduce unemployment.

However, business start-ups face various barriers to their development. For example, business rules and regulations (e.g. registration fees, complexity of the taxation system, costs of hiring and firing, penalizing bankruptcy legislation) affect the ability of firms to enter a market, experiment with a new technology or business model, and exit the market when needed. Innovative start-ups face additional obstacles owing to the uncertainty of the innovation process or lack of collateral, and in many countries are not able to attract the capital they need to scale up [3, p. 178].

That’s why governments of developed countries pay much more attention to their support, realizing their main competitive advantage that lies in using new knowledge and on their basis producing innovative products.

The purpose of support policy of innovative start-up in OECD countries is to improve business environment for existing and future entrepreneurs, and can be grouped in three categories.

• Policies that shape the recognition of opportunities: they include entrepreneurship promotion (e.g. awareness-raising campaigns, awards programs and entrepreneurship events), entrepreneurship education (i.e. from primary to tertiary education, including vocational and educational training), and information and advice on business creation (e.g. mentoring and coaching, including through business incubation).
• Policies that facilitate market entry and enable firms to experiment with new technologies and business models: they are primarily competition policies (e.g. anti-trust laws), business regulations (e.g. administrative burdens on start-ups, regulations that affect firm growth, bankruptcy legislation), taxation (e.g. tax, licenses and fees required of new firms), labor market policies (e.g. employment protection legislation) and social security rules (e.g. non-wage labor costs and social insurance entitlements).
• Policies that influence market opportunities: they include policies affecting technology development, public procurement and business financing (especially equity finance), but also programs that provide information and advice on expansion and internationalization (e.g. business accelerators) [3, с. 178].

Innovative start-ups became a new form of innovative entrepreneurship, and their development – a tool of high-tech economic activities, which provides high added value. That’s why different support mechanisms of these category enterprises in OECD countries became an important element of economic growth of country on innovative basis. Implementation of policy about establishment and development of small innovative enterprises, in particular, start-ups in Ukraine, requires: creation of corresponding conceptual-categorical apparatus, acceptance of a relevant legal framework, and implementation of state support mechanisms and adequate monitoring of their effectiveness. On the basis of these activities, on the one hand, should be considering of the best practice of countries-innovative leaders, with the other - Ukrainian realities.

References

1. Start-up Latin America Promoting Innovation in the Region, OECD, 2013, 209 p.
2. Innovation Policy: Start-up promotion instruments in OECD countries and their application in developing countries, 2012, 53 p.
3. Science, Technology and Industry Outlook, OECD, 2014, 478 p.