Scientific journal
European Journal of Natural History
ISSN 2073-4972

OBSTACLES FOR PROMOTING INNOVATIONS IN RUSSIAN MANUFACTURING INDUSTRY AND THE ROLE OF PUBLIC-PRIVATE PARTNERSHIP UNDER CURRENT FINANCIAL MARKETS CONDITION

Kholodnaya N.D.

Specific weight of innovative products in the total amount of shipped goods in Russian manufacturing industry is equal to 5% over the past 20 years, it has reached the lowest point in 1996, 1998 and 1999 years [1]. The fall in 1998 and preservation of this level in 1999 was caused by the financial crises that was the deepest in the history of Russia. The number of research institutes has decreased by 20% for the past 15 years; the number of design and survey organizations has declined from 495 in 1992 to 58 in 2006. Russia has inherited the strong innovation system, the science of our country made inestimable contribution towards the progress of society, but the strength of Russian innovation system has not been reinforced or kept the same level, it has even aggravated its positions. The command economy converted into the transition economy in one moment, at the same time there was a replacement of the centralized control system into the system of free market forces. The Russian scientific system has lost its position of budgetary assignments recipient, time of drastic recession has begun. The tendency of sharp fall in the State expenditure on R&D was typical for all countries with transition economy, f.i. in Hungary state expenditures on R&D has decreased from 1 % of GDP in 1990 to 0, 5 % of GDP in 1994-1996. There are several the most critical factors impeding the fostering high -tech innovations in Russian manufacturing industry revealed by Russian scientist [2]. According to the results of the research [2] these factors can be listed as follows: №1 high economic risk, № 2 high cost of innovations, №3 lack of internal sources of finance and authorities support, № 4 immunity of the organizations to innovations, № 5 lack of highly skilled staff, № 6 lack of the information on new technologies, № 7 lack marketing research, № 8 discrepancy in law and regulations, № 9 innovative products are not popular among customers and are in low demand.

We analyzed available statistics [2] and revealed that the most crucial factors for delaying innovations in manufacturing industry are № 2 and № 3, other factors are not far in terms of their significance, the least important factor is № 4. In Western Europe countries the picture slightly differs: in Austria, Belgium, Germany, Greece, Iceland, Spain and Italy one of the major factors interfering to innovations is the lack of highly -skilled staff, this factor holds the second - the third place in a rating of factors, unlike in Russia where this indicator is at the sixth place out of nine in a rating. It typically that for all listed countries the least considerable factor is the factor № 4, probably, it is due to the fact that owners of manufacturing companies are often private entrepreneurs. Traditionally the representatives of public sector are the least susceptible to innovations. In contemporary Russia the significant part of R&D activity occurs in a private sector, as well as fifteen years ago. Government´s share in R&D expenses has remained at the same level since 1996 and is equal to 25%, the share of private sector is accordingly 66%. Basically the enterprises of private sector are involved in the manufacturing process of goods and services for making profit, such enterprises also include the unitary entities. Despite the fact that two thirds of researches is conducted in a private sector and only a quarter - in the pubic sector, 70 % of full professors and 50 % of philosophy doctors are occupied in public sector. Relative density of researchers with a scientific degree has been rising every year and is approximately 25 % in 2006. The level of innovations utilization in Russia is quite modest, considering the accumulated human capital resources, namely people inclined to scientific and research activity. The Russian innovation system comprises of blocks and segments of promising R&D activities, but this system does not function in a productive manner due to inadequate stimulus and adverse external conditions [3]. The structural misbalance lies in the fact that the essential number of R&D is financed by budgetary tools, so since 1995 till 2006 according to Goskomstat the share of budgetary funds made up to 60 % in R&D finance while the share of private sector was nearly 17-19 %. Low level of interaction between science and business interferes the achievement of the possible outcome from the human capital utilization. There is no mechanism on a technological transfer of knowledge to business, interaction between public and private sector in a science has unsystematic character. There is a serious problem of uncertainty related to the property rights to assets, such uncertainty complicates interaction with private entities and impedes a technological transfer, leads to arising conflicts of interests between institutes and can push the conflict between the targets of researchers and aims of organizations. There is a problem of institutional frameworks as well. Three basic mechanisms of effective and fast distribution of resources do not work properly in Russia: (1) the corporate governance policy of investing future income, (2) a financial system, capable to operate with risks of the investments connected with innovations, (3) and an active state policy of royalty distribution from oil and gas export for knowledge economy financing [3]. Last years there were serious disputes on carrying out of a uniform policy and introduction of government programs on promoting innovations in industry. The state is one of the most effective actor forming living conditions and practical application of a science in manufacturing process and in other spheres of economy [4]. Government may and should play a key role in realization of transition from raw material economy to the knowledge-based economy, especially it´s important at the time of the significant turbulence in financial markets. First PPP (public-private partnerships) projects have been initiated in Russia at the beginning of XXI century, first Russian Venture fund was founded in 2003. Financial crises of 2008 became a catalyst for emerging new forms of PPP in innovations such as cluster researches, this tool assist to SME in competing with multinational companies. PPP is not an instrument of providing interest free finance or even subsidies to business, it´s a tool which can form a base for development high-tech SME and large organizations with a mission for orientation R&D to finding solutions of overcoming financial crises consequences.

References

  1. http://www.gks.ru/
  2. Gokhberg L. Indicators of innovative activity. Russia, 2007.
  3. OECD, Fostering Public-private partnerships for innovations in Russia, 2005.
  4. Kelle V.Zh. Innovation system of Russia: formation and functioning, Moscow, 2003.

The work was submitted to III international scientific conference «Basic Research», Dominican Republic, April 12-22, 2009, came to the editorial office on 04.03.2009.