1. The role of the State in national system of innovation in Russia Tatiana Kuznetsova Director, Centre for S&T, Innovation and Information Policies, Institute for Statistical Studies and Economics of Knowledge, Higher School of Economics E-mail: tkuznetzova@hse.ru Thiruvananthapuram, India, August 19-21 2009

2. 2 Current socio-economic context – completing transition to the market economy and transforming of the socio-economic and political system Democratisation and liberalisation, lowering the level of social confrontation, development of civil society elements Implementation of market self-regulation instruments and institutions Setup of a new public administration system, lowering barriers for business activity Strengthening Russia’s global position

3. 3 Current economic trends (% of the previous year) 2005200620072000- 2007 2008 (est) March 2009 / March 2008 GDP106.4107.4107.6107.0105.690.5 Consumer price index109.9109.0112.0113.6114.1101.3 Industrial production index104.0104.4106.0105.8102.186.3 Capital investment110.9113.7120.0112.5109.184.6 Real cash earnings112.4113.3110.3111.6102.799.9 Real average monthly wages112.6113.3115.8115.0109.794.3 Retail turnover112.8113.9115.0111.6113.096.0 Turnover of services purchased by the public106.3107.6107.2105.7112.896.7 Exports133.1124.7116.5122.1140.2- Imports128.8131.3136.8124.6134.9-

4. 4 Internal restraints on the development of Russia’s economy Economic growth, quality of life – ensured by earnings from exporting oil, gas and raw materials; Structural misbalances, technological gap with leading industrial nations Monopolisation on local markets, low incentives to advance productivity and competitiveness Inadequate protection of ownership rights Lack of incentives for a “pragmatic coalition” between business, government and public High regional differentiation Significant inequality in income distribution and social infrastructure development

5. 5 Major indicators of the S&T complex 20002003200520062007 GERD at constant 1989 prices (bln roubles)3.34.84.64.95.6 GERD as a % of GDP1.051.281.071.081.12 FBA on civil S&T at constant 1991 prices (bln roubles)2.003.224.164.545.5 FBA on civil S&T as a % of GDP0.230.310.36 0.4 R&D personnel per 10 000 employment138130122 135 Patent applications with the indication of Russia in Russia (thousands)28.730.732.337.739.4 Patents granted (thousands)17.624.723.423.323.0 Technology balance of payments (mln of US dollars)20.6-428.7-564.8-595.0-796.0 R&D institutions40993797356636223957 among them industrial enterprises323264231255265

6. 6 Gross domestic expenditure on R&D

7. 7 Interim conclusion R&D sector in Russia: still developing along rather conflicting trends “+” growth of funding preservation of strong position: –in basic R&D and –in certain priority fields of applied R&D “-” stagnation of the national S&T preservation of the Soviet model: –Russian science is relatively large (vis-à-vis its scientific and technological outcomes) –centrally directed and –government-financed

8. 8 Organisational structure The network of R&D-performing institutions and its scale have remained nearly intact over the recent years Their number – 3,957 ( 2007), only 2.5% lower than ten years ago Institutional features are also rather sustainable R&D sector is dominated by research institutes (51.5% of all units, 60% of R&D personnel) and design organisations (12.6%, 22.5%, respectively) Research and design organisations are legally independent of universities and businesses: only 265 industrial enterprises (6.7% of R&D units, 7.1% of R&D personnel) and 500 universities (12.6% and 5%), regularly engaged in R&D

9. 9 GERD growth Positive trends GERD increase 1998-2007 – more than 20 times at constant prices – more than 2 times Negative trends RussiaOther economies GERD (% of GDP) 1.07 (2006); 1.12 (2007) Israel – 4.65%; Japan – 3.39%; USA – 2.62%; China – 1.42% GERD (PPP) 17.1 bln. $ (2006); 25.1 bln. $ (2007) 17 times lower than in USA; 7 – in Japan; 4 – in China; 3.3 – in Germany; 1.5 – in Britain BARD (PPP) 12 bln. $ (civil R&D, 2006) 2-2,5 times lower than in France, Germany, Britain; 3,5 – than in Japan; 14 – than in USA

10. 10 Productivity: competitiveness loss Publication in World Scientific Journals Russia – 2.42%, 11th position in the world (1995 – 7, 1980 – 3); China – 9.13, 2nd position (1995 – 1.6, 14 position) Technology exports Russia – 0.63 bln $; Finland – 3.8 bln $; Austria – 6.1 bln $; USA – 85.9 bln $ Resident patent applications Russia is lagging behind Japan – 12 times, USA – 7.8, Korea – 3.4 times Share of the global hi-tech market Russia – 0.28 %; Gong-Kong – 5.44%; Singapore – 4.58%; Korea – 3.85% Innovative activity of enterprises Russia – 9.3% EU: from 14.7% (Latvia) – to 69.7% (Germany) Share of innovative products in total sales of industrial products Russia – 1.28%; Germany – 5, Finland – 3.9, France – 3.1% Share of innovative products in total industrial products Russia – 2.9%; Germany – 25.5, Finland – 23.7, France – 20.7%

11. 11 S&T and innovation policies Objectives – largely determined by a complex of various socio-economic and political factors Government – was recently able to channel additional resources into this sector. Nation – needs to deal with a whole set of complex issues simultaneously Dual challenge for S&T and innovation policies – to stimulate both sides of markets for innovation – demand and supply

12. 12 New cycle of strategic documents and implementation programmes Strategy for S&T and Innovation in the Russian Federation until 2015 (2006) Federal Target-Oriented Programme “Research and Development in Priority Areas for the S&T Complex Development in Russia for 2007-2012” (2006) President’s report – On the Strategy of Russia’s Development until 2020 (2008) Conception of a Long-Term Development until 2020 (2008)

13. 13 Key strategic agenda Despite their inevitable adjustment against the background of the global financial crisis, the outlined in these documents measures will in the long run allow to tackle the principal systemic problem of the national S&T complex – the combination of low efficiency in using resources (for R&D) and insufficient demand for innovation from businesses. The ultimate anticipated result is growth in quality and scale of Russia’s S&T output supplied and increased demand for technology and innovation from industry.

14. 14 Policy actions intended for S&T and innovation (Conception -2020) Promoting demand for new technology and innovation from companies Increasing the quality and scale of output offered by national S&T Developing human capital in line with challenges and requirements of innovative economy Setting up an efficient system for selecting and implementing long-term S&T priorities

15. 15 Major focus areas of national S&T and innovation policies Priority setting; national S&T Foresight exercise for 2025 Support to nanoindustry Restructuring government R&D institutions Evaluation of R&D units’ performance Improving legislation for the protection of intellectual property rights and technology commercialisation Public-private partnership Tax incentives for R&D and innovation Innovation infrastructure International S&T cooperation Support to university research

16. 16 Restructuring government R&D institutions Traditional domination of the state-owned budget-funded institutions (as in the USSR) remains one of the key features of the Russian S&T sector Various types of commercial and non-for-profit organisations were allowed during the transition to the market economy, but there was little change with the respect to government R&D organisations Nearly 43% R&D organisations in Russia were set up and are fully funded by the government Legislation imposes strict limitations on their legal rights that in many cases contradict with both academic freedom and economic reality Government R&D institutions, while claiming significant budgetary allocations, do not provide any guarantees for their efficient use, there is no link between performance and funding

17. 17 Evaluation of R&D units’ performance Post-Soviet period – research evaluation exercises have been limited to selection procedures for financing of competitive projects by government agencies and state science foundations; R&D institutions stayed intact To reverse the trend a government statement “On the system of performance evaluation for civil R&D organisations” (2008) was adopted. Its main goals – to establish procedures and criteria for regular performance assessments of government R&D organisations and optimise their network. The regulation combines periodical statistical surveys (once in 5 years) with activities of evaluation commissions involving major interest groups (government agencies, business, academia, scientific community, NGOs)

18. 18 Support to university research National Priority Project “Education” – competitive institutional grants to HEIs implementing innovative education programmes (2006-2007). Research universities initiative – to support best universities as centres of excellence. Two HEIs in Moscow were recognised as national research universities. In 2009, a follow-up programme to select another 10-15 research universities in different S&T areas started. Federal Programme “Science and Education Manpower for Innovative Russia” (2008) for 2009-2013 – various actions to attract young talents and highly-skilled professionals to HEIs and R&D institutions. Federal law “On Changes to the Selected Laws of the Russian Federation Concerning the Integration of Education and Science”(2007) – legal basis for different models of integrating science with university training

19. 19 Russian S&T under the impact of global economic crisis: search for new strategies The need to adjust innovative efforts of the government in view of the crisis is obvious and is confirmed by the anti-crisis practice of most of industrial nations These programmes normally focus on recovering macroeconomic parameters as well as on ensuring national competitiveness in the post- crisis period institutional reforms to overcome departmental miscoordination, to increase efficiency of R&D organisations –concentration of resources in the centres of excellence –additional policy measures to expand opportunities for public research organisations and HEIs to participate in innovation activities, facilitate academic mobility, etc.

20. 20 Thank you!