Faced with numerous economic challenges, Russia should work on a new strategy to boost its innovation sector. Russia Direct presents its special report on the role of high-tech hubs in this process.

Russian Pavilion at the Venice Architeture Biennale 2012. Photo: Skolkovo

With the beginning of the St. Petersburg International Economic Forum, the discussion of Russia’s economic modernization strategy is once again making headlines. A year of sanctions, war in Ukraine and geopolitical confrontation did not go well for the Russian economy. The only option that is available for the Russian government is to leverage the natural advantages of Russian human capital and find the most effective way to modernize the outdated structure of the economy.

In this context, the release of Russia Direct’s new report, “Insider’s Guide to Russian High-Tech Hubs,” is quite timely. The authors of the report – which include economists and representatives of both major state agencies and fast-growing innovation centers  share their views and recommendations on how Russian innovation should be supported and fostered to ensure the country’s successful transformation to a knowledge-based economy.

High-tech hubs in this respect seem to provide an effective solution. After all, the main goals of today’s technoparks include “diversifying the economy of the Russian Federation, changing its structure, developing production in high-tech areas, and raising national self-esteem,” writes Andrei Shpilenko, director of the non-profit Association of Technoparks in High Technology.

Indeed, compared to other global competitors, Russia has been unable to make a smooth transition to new models of innovation. The main reason for this is that, after the collapse of the Soviet Union and the reforms of the 1990s, almost 80 percent of industry-based science was eliminated. Russia had to basically recreate a system that would enable many achievements of academic research to be put into practice, says Sergei Sharakshane, Russian Academy of Sciences spokesperson.

What is necessary now is to build, once again, a sound institutional environment for wide-scale innovations to emerge. And this is precisely what is the state government is currently pursuing: In the mid-2000s, the authorities started to actively build a legislative framework for the creation of high-tech hubs and innovation clusters. Since then, a substantial amount of public money has been allocated to the establishment and support of technoparks under a series of dedicated programs.

For instance, according to the Ministry of Telecom and Mass Communications of Russia, as a result of their integrated program (that operated from 2007 to 2014) 12 high-tech parks were created in 10 regions of Russia. Investment from the federal center comprised 13 billion rubles ($228.6 million), while the regions invested 18 billion rubles ($316.8 million). The annual income for more than 775 firms accommodated by these technoparks was more than 40.5 billion rubles ($712.7 million) in 2014.

Even though the positive signs are present, it is still necessary to look at what is missing from Russia’s strategy to improve its innovation sector.

Oleg Buklemishev, associate professor in the Economics department of Moscow State University and a former assistant to the prime minister, strongly believes that the government does not do enough to make Russia a welcoming place for young innovators and their new technologies. While offering his recommendations for transforming Russian natural advantages into innovation breakthroughs, the economist warns that Russia still has a long way ahead of it and will have to get rid of its “prevailing xenophopic notions” in order to join in global innovation growth.

The experience of the Skolkovo Innovation Center, the Bauman Moscow State Technical University (BMSTU) and the Troitsk Technopark seem to provide instructive examples to see how these assumptions might work in practice.

According to the representatives of these innovation centers, it is evident that high-tech hubs do indeed offer a sufficient way of reorienting the Russian economy toward import-substitution and knowledge-based production.

For instance, Sergei Sharakshane argues, “The country needs a clear market-oriented model of scientific and industrial infrastructure that covers the initial phase of the innovation process, in which small and medium-sized businesses (including startups) implement scientific ideas.” And this is precisely what high-tech hubs are doing.

Even though this might only once again prove the Russia’s desire for independence, this should not scare off those international entrepreneurs interested in taking part in the complex innovative transition of Russia. Kendrick White, a U.S.-born entrepreneur with more than 20 years of investing and management experience in Russia, agrees and offers 10 recommendations for innovation entrepreneurs. Notwithstanding all the risks, he is still hopeful that the country’s younger generation of entrepreneurs will establish Russia as a leading innovation economy.

How can Russia commercialize new innovations? What are examples of Russia’s most successful technoparks? What should be the state’s role in developing the innovation sector? Download the report and find out.