The new RD report, “The Future of Russia’s Innovation Economy,” examines how Russia’s innovation sector must adjust to the changing economic environment created by Western sanctions. It presents two alternative scenarios for Russian innovation, one focused on the West and one focused on China.

In 2009 the Russian government named innovative development as the country's main political and economic priority. Photo: Olga Sokolova

Although Russia was ranked as one of the Top 50 most innovative countries in the world by the Global Innovation Index in 2014, Western sanctions continue to loom as a big problem for the future development of Russia’s innovation economy. 

Given that Russia has only begun development of its innovation economy over the past decade, Russia’s innovations have been primarily based in the nuclear and atomic energy and space exploration fields, or within the military-industrial complex. The situation is both challenging and tricky.

The new RD report, “The Future of Russia’s Innovation Economy,” addresses the problem by “highlighting the opportunities and risks in Russia’s growing innovation economy, and then considering two fundamentally different scenarios for moving forward.”

According to the first scenario, Russia creates stronger links with China, and the two nations jointly leverage their scientific and technological potential, especially in fields where Russia has strong basic science and research capabilities.

“In the second scenario, Russia shakes off the uncertainty surrounding the U.S.-Russia relationship and continues to form partnerships with U.S. universities and Western venture capital investors,” the reports reads. “This would lead to a growth of a more entrepreneurial culture within Russia and new technological innovations that respond to consumer demand. The choice that Russia ultimately makes will likely determine the path of its economic development and modernization for the next decade.”

The authors are Vladimir Korovkin of the Moscow School of Management Skolkovo, Stanislav Tkachenko of St. Petersburg State University, Larisa Smirnova of Xiamen University in China, and Adrian Erlinger of American Councils for International Education.

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Tkachenko focuses on the ways Russia can spur its innovation potential despite Western sanctions and explains why it “will be forced to listen more closely to the opinion of domestic business with regard to improving the environment.”

“The sanctions will force Russian business into markets where it previously had no presence or was subordinate to the overriding priority of developing relations with transatlantic partners,” he said. “The center of the world economy is ever more clearly shifting towards the Asia-Pacific region, of which Russia should take full account and reduce its economic and technological dependence on the U.S. and its closest allies.”

Further deterioration of relations with the West will also likely be detrimental for Russia’s scientific sector, hence, a prompt resolution of the political crisis in Ukraine and return to at least pre-crisis level of relations with the West corresponds to Russia’s interests,” Smirnova writes.

She focuses primarily on the Chinese-Russian collaboration on innovation in an attempt to answer what Russia-China innovation cooperation looks like today, what potential it has for the economic progress of the two countries and if closer Russia-China relations in the area of innovation can ever pose a challenge to the West.

Meanwhile, Erlinger focuses on the opportunities for U.S.-Russia collaboration on innovation despite each new round of sanctions and counter-sanctions. He pins a lot of hope on the academic potential of both countries and public diplomacy.

Universities serve as a vital, yet often underrepresented, link to U.S.-Russia science and business ties,” he writes. “The Enhancing University Research and Entrepreneurial Capacity Program (EURECA) was launched in 2010 to complement and support the growth of entrepreneurship and innovation. The US-Russia Innovation Corridor, a EURECA initiative, serves as an education-based initiative to catalyze actors across the innovation ecosystems of both countries.”

According to Erlinger, this innovation corridor “serves as a committed actor between U.S. and Russian institutions to build and sustain a community of trusted partnerships.” At the same time, he admits that “political strains are a reminder that universities, government, and businesses are vulnerable to the vicissitudes of the overall relationship” and calls for “continuing robust cooperation on innovation issues” because it “serves a vital function to bridge differences that become more pronounced in times of political strains.” 

What steps should Russia undertake to minimize the impact of sanctions on its innovation sector? Will U.S.-Russia cooperation on innovation ever take off? What role will China play in sustaining Russia’s innovation potential? Read the full version of the report at Russia Direct. Subscribe and download the full version of the report to find out. If you are already an RD subscriber, check your e-mail today and see our message on how to download the report.