Partnering Universities and Companies in Russia: Effects of New Government Initiative

Russia's Innovation Promotion Policies: Their Evolution, Achievements, Problems and Lessons

“…The neoclassical economic theory 2 explains the need for public funding to be allocated to research and development by the phenomenon of market failures, when public benefits from investing in science and technologies turn out to be greater than the rate of return received from similar investment by private investors 3 . It is a well-known fact that the companies experiencing financial difficulties are forced to reject some potentially profitable innovation projects because of the existence of information asymmetry and the risk that the cost of credit may increase 4 .…”

“…The Simple Economics of Basic Scientific Research. Journal of Political Economy, 67 (3), 297-306; Arrow, K. (1962). Economic Welfare and the Allocation of Resources for Invention.…”

“…Princeton University Press. 3 It is noteworthy that Arrow (see the previous note), when speaking of the necessity for the government to implement certain measures to compensate for market failures, also points out the following two fundamental issues: (1) how to guarantee that the investment is cost-effective, and (2) how to identify such market failures? 4 Hall, B. H. (2002).…”

“…So, one of the most important factors that sustain the performance of an innovation system is the support provided by the State to the development of interactions, connections, and networks. It can be recalled that the success achieved in introducing and implementing R&D on a broad scale in the newly industrialized countries was based on intensive multi-disciplinary personnel training, in large groups, and the positive effects of this educational activity tend to accumulate with time 3 . It is the neutral and mass-scale support of R&D activities in the early phase of their development that later on makes it possible to identify genuine market failures whenever they occur, with due regard for their sectoral specificity, and thus to elaborate a more selective policy for promoting innovations.…”

“…Thus, while tax exemptions are better from the point of view of expanding the ongoing innovation projects, subsidies conduce to the launch of new, more long-term projects. Besides, the companies -recipients of grants more often act as innovators on an international level and are more successful in commercializing their products than the companies that are encouraged only by means of tax exemptions 3 .…”