Innovation Activity of Russian Regions –Potential for Local and Foreign R&D Investments Graduate School of Management Seminar Anna-Mari Ylä-Kojola, Juha Väätänen, Marko Torkkeli, Maria Smirnova,

Innovativeness in Russian High-Tech Industries -Project Project duration: 2007–2009 Research partners: Lappeenranta University of Technology: - Northern Dimension Research Centre - Department of Industrial Management St. Petersburg State University, Russia: - Graduate School of Management Funding: - Academy of Finland - Russian Foundation for Humanities

Goal of the Study To study the cluster agglomeration of innovation activities in Russia to find out where foreign and local companies should locate their prospective R&D centers

Innovation framework in Russia Goal to increase the competitiveness of knowledge-intensive sector Science-based education Disequilibrium between public and business sector R&D funding and implementation Industry-science relationship Weak IPR Protection Foreign R&D investments in ICT sector

Theoretical framework –measuring innovation activity with patents Patenting used as an indicator of innovativeness (Acs and Audretsch, 1989) Traditionally highest innovative activity is concentrated in clusters around major urban centers (Audretsch et al. 1996; Ó hUallacháin, 1999; Moreno et al. 2005) Emerge of clusters is highly dependent on industry- and technology-specific factors (Breschi, 2004) Companies located in clusters tend to be more innovative than those located outside the cluster (Brenner et al., 2006)

Data of Russian innovative activity 35 regions (including cities of Moscow and St. Petersburg) were selected according to the number of patent filings in 2006 Other measures: –Number of patent filings in 2003 –R&D expenses in regional level –Patents per 1000 companies –Patents per inhabitants –Percent of organizations having technological innovations –Percent of people with higher education –Gross Regional Product –FDI statistics Data provided by Rospatent and Rosstat

Results –Local aspects Statistics show that: Just like in Europe and US innovations, measured with patents, are focused in few regions: Moscow and Moscow region, St. Petersburg, Rep. of Tatarstan Patenting activity has increased all over the Russia since 2003 Companies may prefer foreign patent offices instead of local ones Efficiency of R&D investments is high in Orel and Tomsk regions Tomsk have also highly educated workforce and relatively high GRP per capita Manufacturing sector is the largest employer in half of the regions

Results –Foreign aspect FDI can promote international technology diffusion Industrial sectors, like fuel industry, are large receivers of FDI Ten most popular regions attract almost 90% of all FDI

Conclusions The results show that innovation clusters emerge in large cities Regional centers, oil and gas producing regions and traditionally science-based regions have largest innovation potential and could be the platforms for foreign and local R&D centers More foreign investments should be invited to these regions to increase knowledge spillovers