EU – Russia Programme “Partnership for Modernization” and Its Role in the Technological Upgrade of the Russian Economy Elena Lenchuk (Institute of Economy, RAS) Russian-Finnish Seminar “Industrial Modernization: Is It Possible to Boost Innovation in Russia” Moscow, October 27, 2011

Implementation of the 2020 Innovation Strategy of the Russian Federation: Target Indices Index Russia’s share in the global exports of high- technology products, % 0.35 (2008) Share of organizations implementing technological innovation in total sample (level of innovation activity), % 7.7 (2009) Share of innovation products and services in the total exports of industrial products and services, % 5.5 (2009) Share of innovation products and services in the total volume of industrial products and services, % Gross domestic expenditure on R&D, % of GDP

The main sectors of the Russian economy in terms of competitiveness in the global market Technological breakthrough: opportunities to take a significant share of global market Aircraft construction Nuclear energy Rocket-space systems (launching) Specific market segments of nanoindustry T echnological parity ( achieving the level of world’s leading economies) - joint efforts and/or technology exchange are possible Metallurgy Transportation Traditional Energy production Chemistry Below the world level: compensation of technology gap, education, search of opportunities for import substitution Civil shipbuilding Pharmaceuticals Machinery construction

A drop in the machinery production ( ) 1990 ( the RSFSR ) Metal cutting machines, including: high precision CNC Civil aircrafts Motor trucks Tractors

Structure of Machinery and Equipment by Age Machinery and Equipment Up to 5 years old –10 years old – 15 years old – 20 years old – 30 years old1814 More than 30 years old5354 Average age of machinery and equipment, years

Import of machines, equipment and vehicles, as well as technologies and technical services USD mio% to the total USD mio% to the total USD mio% to the total USD mio% to the total Imports total Import of machines, equipment and vehicles Import of technologies and technical services Number of contracts Annual payments, USD mio Number of contracts Annual payments, USD mio Number of contracts Annual payments USD mio Number of contracts Annual payments, USD mio No data

Foreign Direct Investment to Russia (USD billion)

Foreign trade of the Russian Federation indicators Value USD mio % to the total Value USD mio % to the total Value USD mio % to the total Value USD mio % to the total Export Import Вalance of trade EU -27 Export , Import , Balance of trade

The basic principles to build the Partnership for Modernization creation of the diversified competitive economy; strengthening bilateral trade and economic interaction; expanding opportunities for investment in key sectors driving growth and innovation; creating favourable conditions for SMEs; strengthening cooperation in the sphere of innovation and R&D; alignment of technical regulations and standards; ensuring the effective functioning of the judiciary and strengthening the fight against corruption; promoting people-to-people links and enhancing dialogue with businesses

The key initiatives presented at the 1 st EU-Russia Innovation Forum, Lappeenranta, May 25-27, 2010 Key initiatives regarding Russia-EU innovation cooperation Key initiatives regarding Russia-EU Partnership for Modernization To consider the innovation cooperation the top priority in Russia-EU Partnership To foster the modernization of Russian companies To ensure the formation of the Common Space of Innovation and R&D Cooperation To introduce the visa-free regime between Russia and the EU To enhance mechanisms, promoting innovations and spreading information about innovative business projects To develop and implement a series of pilot projects in the sphere of energy efficiency and energy saving To develop a programme, stimulating joint initiatives in the field of innovation cooperation between Russia and the EU, and envisaging appropriate financial and organizational support To promote law enforcement

Doing Business (2011 rating, 183 countries) Country Kazakhstan (+15) ↑ Belarus (-4) ↓ China (-1) ↓ Russia (-7) ↓ Brazil (-3) ↓ India (+1) ↑ Ukraine (+2) ↑ Components of the rating system Enforcing contracts 1818 (0)- Registering property 4551 (-6) ↓ Getting a credit 8789 (-2) ↓ Protecting investors 9293 (-1) ↓ Closing a business (-10) ↓ Paying taxes (-2) ↓ Starting a business (-4) ↓ Trading across borders (0)- Getting a construction permit (0)-

Government supporting and stimulating measures in Russia’s cooperation with foreign countries in technology and innovations To draft and pass the law on the basic principles of the policy aimed at: attracting foreign direct investment in high-tech and innovation production, establishing the regulatory and legal framework, including the state institutions responsible for setting up the policy and rules in foreign investment in accordance with the strategic objectives of innovation-based development of the national economy; to annually update the list of top-priority industries, that require investment, at the federal and regional levels; to improve the selecting procedures for projects in the field of investment cooperation with due regard to the tasks of innovation- based modernization of the Russian economy;

continued to create a system, promoting foreign investments, with the participation of a broad competitive network of the state institutions, commercial banks and insurance companies in order to reduce political and commercial risks of the foreign capital; to create consulting agencies engaged in selecting and procuring high priority projects, attracting investors interested in such projects, and promptly ensuring turnkey deals; to provide the government with expertise and evaluation of all the major investment projects; to promote harmonization of Russian and international technical norms and regulations (as well as to create a system of mutual acknowledgement of certificates); to develop a national monitoring system in the field of investment climate in order to set up favourable conditions for foreign direct investments and improve the country’s image abroad.

Thank you for attention!