Mikhail Kuzyk

Fostering Innovation Performance of Russian Manufacturing Enterprises: New Opportunities and Limitations

Denis Ivanov - Researcher, Interdepartmental Analytical Centre. E-mail: ivanov@iacenter.ruMikhail Kuzyk - Discipline Leader, Interdepartmental Analytical Centre. E-mail: kuzyk@iacenter.ruYury Simachev - Deputy Managing Director, Interdepartmental Analytical Centre. E-mail: simachev@iacenter.ruAddress: 31/29, bld.2, Povarskaya str., Moscow, Russia 121069, p.o. box 35.Russian innovation policy has fostered considerable discussion: how to encourage innovation, what methods work best, and what institutional and resource bases are required, including a broad perception among decision-makers of the range of instruments commonly used. However, at the public level, by contrast with some local innovative projects, policy has not yet succeeded in finding an efficient way to leverage business innovation performance. This paper is based on an autumn 2011 survey of top managers of more than 600 Russian industrial enterprises. The authors analyze the success of current instruments for fostering business innovation and identify business demand for public policies. It focuses on factors hindering Russian firms’ innovation, including the instable business climate and internal bureaucratization of business processes, which limit openness to innovation, and factors promoting it, strengthening competitiveness, improving public procurement, and reinforcing industrial standards. More than half of the managers of innovative companies observed effects of policies promoting innovation, although this observation was mainly by champions rather than outsiders. According to the respondents the maximum policy outreach is attributable in the survey to tax incentives. In this sense, policy tools that were appreciated were those contributing to the expansion of innovation activity than to its start. The productivity of innovation naturally depends on management quality. The argument here is that policies that foster a stable regulatory environment attract innovation and investment, which helps augment the population of innovative firms. Such measures boost others more directly fostering innovation, especially new firms that need help in distributing risk. The tendency of respondents to appreciate importsubstitution policy is associated here with their lack of export orientation for the hi-tech products they produce. Policies restraining foreign trade, however, should be avoided as providing an adverse incentive to innovate as well as worsening conditions for technology adoption and adjustment.

Russian Financial Development Institutions: Are We on the Right Way?

The article considers the main stages in the evolution of the Russian financial development institutions in the past decade and a half, models and conditions for their activities, and the main results. The authors analyze features of the current development institutions system as a whole, its key changes and main trends. Particular attention is paid to the study of internal imbalances in the development institutions system, as well as external constraints to improve its effectiveness.

Russia's Innovation Promotion Policies: Their Evolution, Achievements, Problems and Lessons

Innovations, science and technology, and innovation policies represent the limited range of fields where, as believed by a majority of eminent contemporary economists and analysts, it can be possible and even reasonable for the government to interfere. The only arguable aspects are, in the main, the scale, forms and limits of government interference and the experts also discuss and explore the worlds best practices and the principles underlying each specific policy . The necessity of government interference in order to promote innovations is pro-claimed (explicitly or implicitly) by two basic concepts of economic development – the neo-classical and evolution theories.

Import Dependence and Import Substitution in Russian Manufacturing: A Business Viewpoint

This study evaluates the import dependence of Russian industrial firms and analyzes the ‘switch’ to using Russian products and technologies in the context of their availability and firms’ interest in them. The main information source for the study was a survey of company executives conducted in September-October 2015. The obtained results suggest that in quantitative terms the import consumption levels for manufacturing industries in Russia are relatively small, especially compared with the corresponding levels of Western European countries. At the same time, about two thirds of the surveyed companies are significantly dependent on imports, primarily imports of machinery and equipment. The main reason for the use of imports is the absence of Russian analogues. If they are present, there are problems with the low quality of those Russian analogues and the fact that they are not in line with the client’s technological requirements. In general, a higher level of import dependence is typical of high-tech and successful companies, which means that these companies are the most vulnerable to any import restrictions. The current import dependency level does not satisfy many companies which forces them to try to reduce this dependency: mostly it takes the form of switching to national suppliers, slightly less often — import diversification. The Russian import substitution policy is associated with an attempt to revive, modernize or create the missing production elements in the national economy, i.e., it is essentially vertical. However, in the absence of close work with the horizontal measures, such as the development of certain critical technologies, the formation of new areas of knowledge and filling previously missing science competences, such a policy is characterized by a ‘limited shelf life’, constant lag, with a focus primarily on the price competitiveness. All this generates an expansion of an economy that is highly sensitive to currency fluctuations. A proactive import substitution policy linked to new emerging markets is needed.

Industrial and Innovation Policy

Industrial policy has always attracted significant attention among the political class, business people and technical specialists of Russia. Much of this interest, of course, is driven by the basic redistribution of rents driven by national industrial policy, that is, the very real prospect of different economic sectors and players receiving direct material and political advantages in the near and long term.

Industrial Development, Structural Changes, and Industrial Policy in Russia

Abstract The chapter is devoted to the analysis of industrial development in Russia since 2005. Characteristic features of the Russian industry are considered. It is shown that the Russian industry is specific both by its structure and its high heterogeneity. The mining and quarrying sector and related manufacturing industries play a significant role in the Russian economy and major role in industrial production. In the foreseeable future, these sectors can strengthen their leading positions. Considerable attention is paid to the analysis of the industrial policy of the Russian government, which has traditionally been one of the leading actors of industrial development. The main directions of industrial policy are singled out: compensation of negative changes, catching-up, and advance development. It is noted that the role of the government is ambivalent: on the one hand, it seeks to develop high-performing companies, including new and fast-growing ones, and on the other hand, it often supports large, low-performing enterprises. With the declared continuous emphasis of industrial policy on innovation and modernization, low innovativeness of Russian companies remains. Based on the analysis of modern conditions, as well as new objects and instruments of industrial policy, some prospects for future industrial development have been revealed.

The impact of state development institutions on the innovative behavior of firms: Qualitative effects

Basing on a series of in-depth interviews with top executives of Russian innovation companies, the paper analyzes qualitative effects generated by the support from the state development institutions. Non-financial impacts, in particular, changes in firms’ innovation behavior, turned out to be quite significant. At the same time, tightening of formal control of the development institutions increases the risks and costs faced by the supported companies. We have identified two models of firms’ innovation behavior associated with different demand for public support instruments. These models are conditioned not so much to firms’ characteristics, but rather by the values of top managers and their views on appropriate forms of state intervention in innovation processes.

Cooperation between Russian Firms and Research Organizations When Conducting R&D

The article investigates how Russian companies cooperate with research organizations to conduct research and development in order to implement technological innovation. In order to assess behavioral changes, an analysis was carried out at the micro level on the basis of empirical data gathered from a survey of the leaders of more than 600 Russian manufacturing companies (2011–12) and about 350 research institutions and universities (2012). It identifies the key factors determining company demand for cooperation with research organizations, the main barriers to the development of scientific and industrial cooperation, and the specific nature of these barriers for different partners. The article considers the tools and features that are available under Russian innovation policy for stimulating partnerships, and also assesses the effect of this policy on the cooperative behavior of companies.

Взаимодействие Бизнеса и Научных Организаций в Инновационной Сфере: Российский Опыт Стимулирования Сотрудничества (Interaction between Business and Research Organizations in the Sphere of Innovations: The Russian Experience in Promoting Cooperation)

Russian Abstract: Цель работы: микроэкономический анализ современного состояния и проблем научно-производственной кооперации, ключевых факторов и препятствий на пути развития взаимодействия российских исследовательских организаций с бизнесом, а также механизмов государственной поддержки научно-производственной кооперации и результатов их применения.English Abstract: Objective: microeconomic analysis of the current state and problems of scientific and industrial cooperation, key factors and obstacles to the development of cooperation between Russian research organizations with business, as well as the mechanisms of state support for scientific and industrial cooperation and the results of their application.

Russian policies in support of innovation: elusive quest for efficiency

Focused on the efficiency of the Russian innovation-fostering policy, the research is based on an empirical analysis of how policy instruments impact firms’ behavior. The data is obtained from two surveys of more than 600 Russian industrial companies in 2011-2012. The analysis shows that tax incentives are more conducive to innovations with a longer payback period, whereas public funding is more likely to facilitate launching new innovative projects. At the same time, both kinds of innovation support tools are affected by crowding out private funds by public ones. Besides, innovation policy design and administration are not friendly to young companies.