The issue of reform has garnered attention particularly because of a long-standing conflict between the RF Ministry of Education and Science and RAS. Meanwhile, the critical outcome of the exercise should become reform of the survived (albeit rapidly shrinking in terms of the number of both institutions and researchers) departmental science. Public departmental research institutions, including the MIC ones, employ 2/3of all the domestic researchers.
5.5.4. Businesses’ Innovation Activity According to Goskomstat, over the past 6–7 years the group of innovatively active corporations comprised 9–11% of industrial corporations included in a sample of research into the state of innovation activities. According to the 2009 data of the Center for science research and statistics, the proportion of the said corporations declined to 7.7%. Meanwhile, against this background, their spending on innovation activities, including the proportion of R&D expenses, rose slightly (Table 18).
Table Main Indicators of Innovation Activities by Organizations of the Industrial Sector and the Services Sphere The number of inno- Spending on technologi- Of which, as % to the aggregate volume of costs:
Year vatively active organi- cal innovations, On purchases of equipment On R&D zations as Rb. mln and machinery 2006 2830 211392.7 17.8 55.2007 2828 234057.7 16.5 58.2008 2908 307186.9 14.1 59.2009 n/a 399122.0 24.9 51.Sources: Nauka Rossii v tsifrakh: 2009. Statistichesky sbornik. Ì.: TSISN, 2009, Table. 8.1; Nauka Rossii v tsifrakh: 2010. Statistichesky sbornik. Ì.: TSISN, 2010, Table 8.1 (in press).
At the same time, various surveys on innovation activity in the industrial sector post far more optimistic figures, including corporate spending on R&D.
More specifically, a May 2010 survey on 100 large Russian corporations1 showed that a half of them spend on R&D between 3 and 10% of earnings, while another one-third – less than 3% of earnings. At the same time, there were 4 times as many private innovatively active Understood as corporations with no less than USD 100m in annual earnings (Source: Innovation by Large Companies in Russia. Mechanisms, Barriers, Perspectives. M.: RUSNANO, Russian venture Company, New Economic School, PriceWaterhouseCoopers, 2010).
RUSSIAN ECONOMY IN trends and outlooks companies as public ones. For reference: according to OECD data, the large companies’ average volume of spending on R&D accounts for 5% of earnings1. However, around one-third of Russian respondents noted that their innovations were groundbreaking only to their companies.
Another survey the “Expert” media holding ran on 33 large corporations in 2010 complemented the picture and showed that practically all the large companies’ innovative projects focused on the domestic market. Quite notably, while implementing R&D projects, many of them continue using resources of the former departmental research institutions, rather than centering on bolstering cooperation with small-sized start-ups2.
So, the major challenge is corporations’ insufficient innovation activity from the perspective of both volumes and quality of R&D they implement or commission. The bulk of innovations appear imitations, with genuinely pathbreaking ones being noted on the local level. One of main causes behind such a situation is an insufficient level of competition and monopolistic position of many Russian corporations. Besides, the so-called administrative resource is still very strong and its use allows some companies, particularly large public ones, to take various economic advantages (lower tariffs, preferential interest rates, etc.).
At the same time, there is no demand for innovations, either. It is the middle class that forms their major consumer, but it is small in Russia. Some other economic reasons, albeit of a more specific nature, matter too. These are: an insufficient level of intellectual property protection, customs barriers, certification and technical regulation problems, among others. Finally, a whole set of challenges lie in the human resources field (the poor corporate “culture of innovation”, a small number of staff focused on development of innovations and an insufficient number of managers capable of efficiently implementing innovative projects).
A specific segment of the business sector is formed by small-sized start-ups. Their qualitative growth dynamic has long been negative. While in 2004 there were 22,500 start-ups in Russia, by 2009 the figure plummeted to 12,900, with their employees combined accounting for a meager 0.65% of the employed in the SME sector3. Small-sized start-ups are loosely connected to medium-sized and large firms. Many of them are research organizations and universities’ spin-offs, but their ties to the mother organizations in many instances are unstable.
The rise of development institutions limelighted the catastrophic scarcity of small-sized companies at the “seeding” stage whose projects could be backed by venture financing. Mr.
I.M. Bortnik, Chairman of the Board of the Foundation for support of development of small forms of enterprises in the scientific –technical sphere, holds that in order to hit the level of 1,000 venture deals a year, Russia “should support at least 10,000 start-ups to energize the venture industry”4, while today the country sees only some 2,000 start-ups emerge annually.
Innovation in Firms. Microeconomic perspective. OECD, 2009.
Tormysheva T.A. Osnovnye problem, prepyatstvuyuschiye sozdaniyu malykh innovatsionnykh kompaniy v vyzakh//Innovatsii i investitsii dlya modernizatsii i tekhnologicheskogo perevooruzheniya ekonomiki Rossii. Sb.
Materialov. FGU NII RINKTSE, NP “Innovatika”, 2010. P.61.
Ne poseesh- nepozhnesh//Nauka i tekhnologii Rossii. 02.11.2010. – URL: http://strf.ru/material.aspx CatalogId=223&d_no=34744 Date of access: 07.02.2011.
Social Sphere 5.5.5. Government Taking on Encouragement of Corporate Innovation Activity To give fillip to public companies’ innovation activities, in 2010 the Government decided to impose two “compelling” measures:
• The obligation to form corporate innovation development programs following requirements approved by the Government; such programs should be adopted together, rather than within, investment programsæ • A “standard” proportion of spending on R&D to be set individually for each company, proceeding from its sectoral specialization and its comparison with peers overseas.
The Government compiled a list of 55 largest public companies (including RZHD, Gazprom, FSK “UES”, OAK, Rosteknologii)1, which were suggested to design innovation development plans. It is planned to consider development plans by some 30 such companies in early 2011. The purpose of the exercise is to give boost to their innovative activities, bolster demand for innovations particularly by means of a significant “extension of introduction by companies of findings of outsider R&D carried out in the domestic sector for generation of knowledge and higher education, as well as the use of cutting-edge technologies, products and services developed by small- and medium-sized innovative enterprises”2. So, as far as public corporations are concerned, an attempt is made to link them with scientific organizations and to increase outsourcing, which, in contrast to worldwide practices, so far has been very moderate.
As in many other recent governmental projects, a particular emphasis is likewise made on cooperation between corporations and universities. It is envisaged that corporations would select backbone universities and research organizations to run join research and technological works, form, in tandem with universities, research programs, mechanisms of exchange with research and technical, and marketing information, and the composition of works on forecasting research and technical development. Lastly, corporations should team up with universities to kick off implementation of programs on increase of the quality of education and staff training for hi-tech sectors.
As concerns private companies, which are harder to “force” to develop and use innovations, the Government provides for other measures, a fraction of which appears important for encouraging innovation in the business sector as a whole, nonetheless, regardless of corporations’ property forms.
Private companies may bid for budget funding on R&D carried out in cooperation with universities; new tax incentive measures are going to be introduced for them; as well, it is planned to intensify the work on introduction of technical regulations and standards. At present the technical regulations and standards establish mandatory requirements only to 36.7% of products subject to the mandatory certification in the RF territory3. Meanwhile, penalties for breaching the said technical regulations and standards prove to be lenient and pose no challenge even to robust small-sized firms, let alone large corporations. The work on revision WebGround. Poyekt monitoring Runeta. – URL: http://webground.su/topic/2010/08/03/t375/. Date of access:
Klepach A.N. O razrabotke program innovatisonnogo razvitiya kompaniy s gosudarstvennym uchastiyem.
Presentation of 03.08.2010 ã. www.economy.gov.ru. Date of access: 07.02.2011.
RUSSIAN ECONOMY IN trends and outlooks of the technical regulations and standards in 2010 was given a posh name of “creation of ‘technological corridors” wherein technical regulation forms an element of a complex of measures, which comprises both stimulating and restricting ones. More specifically, along with harmonization of the regulations and standards according to international standards (the EU’s ones in the first place), which should make enterprises take more vigorously upon innovations, the Government will be funding their innovative projects. According to data as of the late 2011, the selection of projects has begun, and its main criterion is to make sure that upon implementation of the projects in question by 2015, enterprises will have been able to hit the sales volume of Rb. 15 bln.
Finally, the RF Ministry of Economic Development provides for private companies the possibility of introduction of the so-called “contract with the state”. Under such a contract, the state assumes obligations to back corporations’ interests on external markets (eg to lobby raising of customs duties on importation of rival equipment) in exchange for intensification of their innovative activities1.
Support and encouragement of innovative activities were also delivered through development institutions – Rosnano and the Russian venture company (RVC), in particular. So far these institutions to a certain degree have duplicated each other’s operations by developing and introducing similar concepts and arrangements, albeit in different sectoral segments. If improved, their coordination might ensure a new quality of the development of the national innovation support system. So far the “innovation lift” cited in various official documents and presentations has been practically idle, while new high-risk projects have spontaneously found support amid various structures operating in Russia.
As of 12 January 2011, Rosnano had approved 92 production projects and 7 infrastructural ones. Plus, the corporation funds another 31 educational projects and co-funds a number of projects on creation of investment funds (including Skolkovo). It is too premature to judge Rosnano’s performance, as the projects are at an early stage of implementation. Experts voice contrast opinions on the prospective viability of the selected production projects, and many of them criticize them. That said, Rosnano actually became the first institution that introduced a mandatory procedure of international project evaluation and experts selection procedures with account of their past record.
Rosnano’s project on establishment of nanotechnological centers seems promising, for such centers should radically differ from what used to emerge in the form of techno parks, innovation-technological centers and other suchlike infrastructural objects. The peculiarity of nanotechnological centers lies in concentration in the same spot of technological equipment and competencies on incubation of small-sized start ups (marketing, administrative, and information support). Substantial funding will be made available for creation of such centers, including earmarking for equipment purchases. The support will be extended over next 3-years. So, the concept for nanocenters has taken into account past mistakes (short-term funding, its small volumes, an absence of such expenditure items as costs of infrastructure and new equipment). It is planned that by 2015 there will have been as many as 12-15 such centers in Russia. By early 2011 seven centers had already been selected on the basis of competition. RVC establishes analogous structures, too. Thus, the Biopharmaceutical Cluster Fund Presentation by O. Fomichev. Director of the Department of Strategic Management and Budgeting of the RF Ministry of Economic Development, as the plenary session “Large business and innovation” at the “Russian innovations” forum. Moscow. 27.05.2010.
Social Sphere created in 2010 under RVC will not only invest in biotechnological start-ups, but in the cluster’s service companies as well. Given that there are just a handful of service and intermediary companies in Russia, such an approach seems very promising.
RVC’s mission is two-fold: the company runs a contest-based selection of venture managing companies and acquires shares in venture funds these companies establish in the form of closed-end mutual investment funds. The initial expectations of RVC’s performance were fairly high - it was envisaged that already in 2007 RVC would contribute to establishment of 8-12 new venture funds with the aggregate capital of some Rb. 30 bln. Those venture fund were supposed to be investing in companies at their early stage of development. According to the data as of early 2011, as many as 10 venture funds with the aggregate capital of a. Rb. bln. had de facto been created. For reference: venture funds located in Silicon Valley outnumbered 3001.