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КАК ПОВЫСИТЬ КОНКУРЕНТОСПОСОБНОСТЬ РОССИИ В МЕНЯЮЩЕЙСЯ ГЛОБАЛЬНОЙ СРЕДЕ
Пятанова Виктория Ивановна
кандидат экономических наук,
MBA (Кембриджский университет),
доцент кафедры финансового
менеджмента
РЭУ им. Г. В. Плеханова.
Адрес: ФГБОУ ВПО «Российский
экономический университет имени
Г. В. Плеханова», 117997, Москва,
Стремянный пер., д. 36.
E-mail: vpiatanova@mail.ru
Д-р Тюркиш Эдуард
исследователь Университета Paris Ouest Nanterre la Défense; экономист Центра развития ОЭСР. Адрес: Университет Paris Ouest Nanterre la Défense, Франция, 92001, Nanterre Cedex, проспект Республики, д. 200; Центр развития ОЭСР, Франция, 75775, Париж, улица Андре Паскаля, д. 2.
E-mail : edouardturkisch@hotmail.com
Россия имеет огромный потенциал, чтобы быть конкурентоспособной в мировой экономике, поскольку обладает богатыми природными и человеческими ресурсами, имеет сильные позиции в ряде отраслей науки и промышленности и эффективное руководство. Для усиления конкурентоспособности России в глобальном экономическом пространстве необходимо обратить внимание на вопросы, охватывающие диверсификацию и наукоемкость экономики; дальнейшее улучшение бизнес-климата и совершенствование институтов; развитие инноваций, осо-
HOW TO BOOST RUSSIA'S COMPETITIVENESS IN A CATCHING-UP AND GLOBALISATION CONTEXT
Pyatanova, Victoria I.
PhD, MBA (University of Cambridge), Associate Professor of the Department for Financial Management of the PRUE. Address: Plekhanov Russian University of Economics, 36 Stremyanny Lane, Moscow, 117997, Russian Federation. E-mail: vpiatanova@mail.ru
Dr. Turkish, Edouard
Associate Researcher of the University Paris Ouest Nanterre la Défense; Economist of the OECD Development Centre. Address: University Paris Ouest Nanterre la Défense, 200 Avenue de la République, 92001, Nanterre Cedex, France; OECD Development Centre, 2 rue André-Pascal, 75775, Paris Cedex, France.
E-mail: edouardturkisch@hotmail.com
Russia has a great potential to be competitive in the world market because it has rich natural and human resources, strong positions in a range of sciences and industries, and an efficient leadership. To enhance Russia's competitiveness in the global economic context, main issues to be addressed encompass: economic diversification and sophistication; improvement of the business climate, institutions and skills adaptation; further development of innovations, especially in the private sector. The article discusses the current conditions and features of the Russian economy and the main drivers to boost
бенно в частном секторе. В статье рассмотрены текущие условия и особенности российской экономики, а также предложены основные меры для повышения ее конкурентоспособности в меняющихся условиях глобального мира.
Ключевые слова: конкурентоспособность, экономика, переход, диверсификация, инновация, технология, производительность, конкуренция, сравнительное преимущество, ресурсы, возможности, знания, Россия, бизнес-климат, инфраструктура, правительство, образование, наука.
Точки зрения и аргументы, использованные в этой статье, являются исключительно ответственностью экспертов и не должны интерпретироваться как официальные взгляды ОЭСР или правительств стран - членов этой организации.
its competitiveness in a catching-up and globalisation context.
Keywords: competitiveness, economy, transition, diversification, innovation, technology, productivity, competition, comparative advantage, resources, capabilities, knowledge, Russia, business climate, infrastructure, governance, education, science.
The views expressed and arguments employed in this document are solely the responsibility of the experts and should not be interpreted as the official views of the OECD or of the governments of its member countries.
Since the 1990s, the rise of emerging economies and enhanced globalisation have created greater opportunities for trade, financial flows and knowledge transfer, considerably changing the global economic landscape1. Much of the recent increase in trade appears to be the result of the growing demand for commodities from China, as well as outsourcing and offshoring, with manufacturing fragmented across borders as firms exploit comparative cost advantages. In this global context, Russia has a great potential to be competitive in the world market because it has rich natural and human resources, strong positions in a range of sciences and industries, and an efficient leadership. To enhance Russia's competitiveness, issues to be addressed encompass: economic diversification and sophistication; improvement of the business climate, institutions and skills adaptation; further development of innovations, especially in the private sector.
Since the early 1990s, the Russian Federation has been a transitional economy. The 1990s were associated with economic instability, followed by a financial crisis in 1998. After the instability of the 1990s, economic growth
1 Boosting Productivity to Meet Middle-Income Challenge // Perspectives on Global Development Report / OECD. - Paris, 2014.
accelerated significantly. Rouble devaluation in 1998 has made Russian goods and services more competitive - in particular in the domestic market - and the growing internal demand has allowed Russian manufactures to modernize their technical base, buy new equipment and introduce new products. From 1999 to 2008, real GDP expanded at an average of about 7% a year. The 2008 global financial and economic crisis hit the Russian economy particularly hard but was brief (real GDP growth fell to -8% in 2009, but recovered quickly to reach +5% in 2010), due to strong macroeconomic fundamentals, and it had relatively little effect on unemployment. It however showed that Russian GDP growth is volatile due to dependence on exports of natural resources and to a perceived uncertainty of foreign investors in the Russian market (such perceived uncertainty leading to rapid withdrawal of investments when unexpected events occur). After 2009, GDP per capita grew again, although at a slower rate than before 2008, which is consistent with the global economic slowdown.
The rapid rise in GDP per capita in the 2000s was widespread across many non-OECD countries, which has raised a lot of optimism among observers regarding the potential for catching-up of non-OECD countries in income levels. However, productivity in most non-OECD countries is still low compared to more advanced countries, and, more importantly, is not always catching-up quickly, despite the still wide gap in productivity levels and despite the globalisation process. The slowdown in productivity may cause a «middle income trap» in those countries, which would prevent their future catching-up in income levels.
To illustrate to what extent the rapid convergence in GDP per capita in many developing countries in the 2000s is related to labour productivity improvements, GDP per capita can be decomposed into labour productivity (defined here by GDP per person employed) and labour utilisation (defined here by total number of employees as a ratio of total population). The catchup in labour productivity was - with some exceptions (which include in particular the Russian Federation, China, India and Indonesia) - weak or the productivity gap with the OECD average even widened (Figure 1).
The rapid rise in GDP per capita in many non-OECD economies in the 2000s was, in fact, partly linked to improvements in labour utilisation (as measured by number of persons employed as a ratio of total population) together with recovery from the instability and crises of the 1990s. Growth in labour utilisation was high in Latin America, as it was in many African countries, albeit significantly lower than in Latin America. The picture in Asia was mixed, with significant increases in labour utilisation in Pakistan, Cambodia and Vietnam, but decreases in other countries like China and India.
Percentage gap with respect to OECD average in GDP per person employed (in PPP, constant 1990 prices) and in employment as a ratio to the total population, 2000 and 2011.
Bolivia Bolivia
Brazil ra u TO U Brazil
Ecuador Ecuador
Peru 0) F E Peru
Colombia < < c Colombia
Costa Rica co ro Costa Rica
Mexico Mexico
Argentina Argentina
Congo, Dem. Rep. Congo, Dem. Rep.
Tanzania Tanzania
Ethiopia Ethiopia
Cameroon Cameroon
Uganda Uganda
Cote d'Ivoire Cote d'Ivoire
Kenya Kenya
Angola TO TO Angola
Mali M— Mali
Senegal < < Senegal
Mozambique Mozambique
Nigeria Nigeria
Sudan Sudan
Algeria Algeria
Morocco Morocco
South Africa South Africa
Tunisia Tunisia
Bangladesh .n .c Asia Bangladesh
Pakistan Pakistan
India l/l ¡A India
Cambodia Cambodia
Vietnam CO Vietnam
Myanmar < < Myanmar
Philippines rS Ol .n Philippines
Indonesia cu .c Indonesia
China 13 o China
Thailand l/l Thailand
Malaysia Malaysia
Azerbaijan I/} m Azerbaijan
Russian Federation u u Russian Federation
-100-80 -60 -40 -20 0
■ Productivity gap 2011 Productivity gap 2000
-60 -40 -20 0 20 40 Utilisation gap 2011 ■ Utilisation gap 2000
Figure 1. Labour productivity catch-up in a number of countries1
1 Source: World Development Indicators 2013, World Bank, Washington, D. C. Available at: http:// data.worldbank.org/ data-catalog/world-development-indicators
Although improvements in labour utilisation are a positive trend, low productivity growth in Latin America and Africa is worrying as the fall in informal employment should have boosted labour productivity further. Indeed, informality is often associated with low productivity, and many affected firms struggle to be more productive because of barriers such as poor access to finance or the general lack of trust from contract partners1. In Latin America, for instance, a limited degree of catch-up in labour productivity with advanced economies is the main reason for the middle-income growth slowdown. If the region employed existing physical and human capital at the same level of productive efficiency as the United States, per capita income may double (Moreno, 2011).
In Russia, conversely, the rapid rise in GDP per capita in the 2000s has been associated with a clear acceleration of labour productivity across a range of sectors, including manufacturing and services - and also partly with an improvement in labour utilisation (Figure 1). The catching-up in labour productivity beyond the natural resources sector is a very good sign of the potential for adaptation of Russian firms.
One of the main drivers of the very favourable economic development of the Russian Federation's economy in the 2000s has been, nevertheless, the rise in natural resource prices and of the global demand for natural resources. This led to gains of export revenues, elimination of the high public debt and stronger macroeconomic fundamentals. These factors contributed to a steady decrease in unemployment and a booming private consumption. Yet, if well managed, natural resources are a great asset, but future drivers of growth may evolve and increasingly consist of a mix of enhanced competition and enhanced (and clarified) involvement of the state.
Diversification, sophistication and competitiveness
Competition in the global and the domestic markets is intense and growing, in particular to grasp the opportunities of the rising middle classes' consumption. Although it throws up challenges that have to be well managed, it also encourages companies of many developed and emerging economies to rapidly increase their innovative capabilities and move towards new activities with higher value added. This points to the need to enhance competition in order to boost productivity and prepare the domestic firms to compete on different markets. This leads to the need to improve the business climate (see sections below).
But beyond competition by itself, economic diversification, associated with sophistication of production (i. e. a higher value added product structure of an economy), is key to ensure sustainable competitiveness.
1 Key Indicators of the Labour Market, 7th edition. Available at: http://ilo.org/ empelm/ pubs/WCMS_114060/lang--en/index.htm
Economic diversification first makes countries less vulnerable to shocks. It may also make countries' economic structures more adaptable to longer term evolutions in comparative advantages in the world markets. Indeed, diversification - if it comes with sophistication of production - may go along with a more diversified skills supply, as well as with a range of productive firms among different sectors. Therefore the economy may be more capable to grasp rapidly new opportunities and to face challenges implied by changes in competitive edges1.
Conversely, over-specialisation (not only in the resources-rich economies) may lead to rents, economic inefficiencies, and low incentive to invest in other «non-traditional» sectors. Furthermore, countries which in particular specialise in natural resources may also face labour absorption difficulties (as the natural resources sector may not have the capacity to absorb large parts of the labour market), not to mention Dutch disease effects2. Diversification is particularly crucial for economies rich in natural resources, like Russia, helping them to mitigate the impact of exposure to volatility in prices and external demand and, more importantly, to create productive jobs and ensure social stability and safety. The size of the country also matters. While a large country, like Russia, cannot remain competitive without diversification, a small one cannot easily become competitive in multiple sectors.
The importance of diversification is also linked to the level of development - and for Russia it is currently a key issue. A number of studies indeed find a non-linear relationship between production diversification and the level of development: lower middle-income countries are often specialised in natural resources or assembly activities; then, most middle-income countries which successfully converged in a sustainable way towards higher income levels, progressively diversified towards new sectors and activities with higher value added, away from rents; after a diversification at middle income levels comes often a later stage of specialisation as, beyond a certain level of income, countries again become concentrated - whether in terms of employment, value added, or exports3 (see for instance Imbs and Wacziarg, 2003; Koren and Tenreyro,
1 Boosting Productivity to Meet Middle-Income Challenge // Perspectives on Global Development Report / OECD. - Paris, 2014.
2 The Dutch disease in when, on the one hand, profitability in the resource sector driven by high prices attracts labour and investment from the manufacturing sector and makes sectors linked to natural resources more attractive. The services, too, become more attractive because as incomes rise so does the demand for services. On the other hand, as wages increase across all sectors and demand for the domestic currency rises and causes it to appreciate, manufactured goods become more expensive and less competitive in both home and world markets. Both effects contribute to a de-industrialisation process that makes the economy extremely dependent on the resource sector and may reduce the growth potential.
3 In high income economies, this relationship disappears.
2013). In the development process, diversification may continue up to relatively high income levels before countries once more specialise in high value-added activities. As a result, rich countries are more diversified than poor ones. Such trends suggest that increases in diversification and sophistication are stages on the development path, and that diversification and productivity can mutually reinforce each other. That path has been followed by countries like Korea which have conducted their convergence process with advanced economies well.
A key point here is the following: the current globalisation patterns have showed that the sophistication and upgrading are not processes that should be taken for granted. Said differently, diversification is not automatic, as specialisation forces led by the market generally prove stronger, due to agglomeration effects and often too narrow existing comparative advantages in many countries. The current patterns of convergence in most emerging and developing economies, with significant specialisation in low technology sectors driven by existing comparative advantages, will certainly allow many poor countries to continue converging. However, in Russia as well as in other countries where low-cost advantages have faded or are fading due to rising wages, the economy will increasingly have to diversify into higher value added and more technology-intensive sectors. Whereas diversification and sophistication are partly the consequence of a country's overall competitiveness, market forces alone may not be sufficient to achieve them.
This points to the need to foster diversification, and for frameworks and policies to help this diversification, beyond the pure market forces. Governments in countries such as Russia therefore need to play an active role and initiate diversification, since market forces all too easily contribute to specialization, and to the Dutch disease effects of excessive specialisation in natural resources and associated activities.
Greater government involvement requires designed mechanisms and policies to ensure efficient intervention. Russia has implemented policies designed to support diversification and avoid Dutch disease effects. From the end of the 1990s, the Russian Federation has seen large employment shift from manufacturing to the rising services sectors. Yet its share of the world manufacturing export market still increased slightly in the 2000s due to significant productivity increases as well as a booming internal demand, and despite high wages increases. Beyond the development of services, there were some signs of diversification in manufacturing, but the extent of diversification remains one of the biggest challenges to development. The low level of high-tech exports raises in particular concerns when set against Russia's high tertiary education attainment rates and its overall level of development. Strong past dependence on heavy industry, insufficient integration into global value chains, the need for greater coherence between
private sector needs and educational syllabuses - particularly at tertiary level - and the need to considerably improve the marketing of Russian goods in the external markets (Turkisch, 2014), may be key issues. Current considerations in upgrading and diversifying the economy include: the possible use of existing industrial conglomerates to foster diversification; the reliance on completely new sectors or activities through, for instance, an improved business climate; the building of special economic zones (SEZs), innovation clusters and technology platforms; the upgrading and development of modern infrastructures.
A key issue is also to strengthen the rising network of SMEs across different sectors by some intervention, but here arise the issues of choosing the right ones (i.e. the ones that can have prospects in the medium run, or those which can allow externalities such as learning-by-doing, even if themselves fail), or the right sectors.
Investment levels still need to be boosted, that would speed up the renewal of the capital stock and boost the technology content of capital goods. Private firms are in particular scared to take the risk of long-term investment, in part because long-term funding is limited, especially for small firms seeking bank loans. Where private players are reluctant to invest long-term into new technologies, the state can take long-term risks, both in diversifying into new sectors and in expensive, long-term technology upgrades and by developing finance and guarantee schemes for SMEs. In Russia, many major owners of the private manufacturing enterprises also act as their CEOs, although they often do not possess the necessary level of business or technical education to fully understand the necessity of long-term investments into production. The frequent changes of the owners following the M&As and takeovers result in the short-term approach by the owners when they often prefer not to invest long-term but rather treat the enterprise like a milking cow.
Strengthening institutions, public & corporate governance
Once the mechanic catching-up due to factor accumulation and cheap labour comes to an end, a catching-up country's competitiveness increasingly depends on the efficiency of institutions and mechanisms such as product, labour and financial markets. The government should ensure that there is a good business climate, offer the right incentives to invest in new high-productivity sectors and activities and involve new and existing interest groups into governance mechanisms in order to achieve more balanced decision-making processes.
Overall product market regulation, particularly barriers to trade and investment and state control, remains high in large emerging economies, including Russia (Figures 2, 3). While, as underlined in the section above, a strong state is beneficial, there is large room, in Russia, to enhance
competition (in order to boost productivity) and clarify the involvement of the state in the economy. For instance, on one side, in the 2000s, barriers to entrepreneurship tumbled, the list of «strategic» sectors was shortened, and the scope of rules governing those sectors was clarified. Despite improvements in the 2000s, a major issue is the need to improve the business climate, which still lags behind OECD countries. For instance, property rights and international contracts should be better enforced to raise Russia's investment profile and boost investment. There is also the need to strengthen the overall independence of the judicial system and enforce the rule of law so as to increase the perceived efficiency of economic courts1.
China
Russian Federation India Indonesia South Africa Brazil OECD average
0 0.5 1 1.5 2 2.5 3 3.5
Figure 2. Product market regulation in emerging economies2
Note: Index scale of 0-6 from least to most restrictive. A higher indicator means a higher degree of regulation. Product market regulation includes aspects of State control, barriers to entrepreneurship and barriers to trade and investment.
There is also a need for better product market regulations which protect consumers and have the capacity to prevent regulatory capture. Those that protect consumers - by strengthening quality and safety standards and consumer information - can heighten trust in domestic
1 OECD (2014), OECD Economic Survey: Russian Federation 2013, OECD Publishing.
2 Source: Product Market Regulation Database. Available at: www.oecd.org/economy/pmr
products and contributes to the demand for domestic goods, which ultimately benefits domestic producers1.
a) Barriers to trade and investment
b) State control
Figure 3. Barriers to trade and investment and state control in emerging economies2
Note: Index scale of 0-6 from least to most restrictive. A higher indicator means a higher degree of barriers to trade and investment or State control. Barriers to trade and investment include aspects of barriers to FDI, tariffs, discriminatory
1 Boosting Productivity to Meet Middle-Income Challenge / / Perspectives on Global Development Report / OECD. - Paris, 2014.
2 Source: Product Market Regulation Database. Available at: www.oecd.org/economy/pmr
procedures, and regulatory barriers. As a sub-category of product market regulation, State control includes aspects of public ownership and of involvement of the State in business operations.
Financial sector liberalisation has also been introduced to foster competition in the financial sector and so improve the sector's efficiency and reduce the cost of borrowing. Banking system has been transformed in this way since the 1990s with efficiency and performance improving, apparently in response to a more competitive climate. In the Russian Federation, the country's banking system has stabilised and access to capital has significantly improved in the 2000s. Although the Russian Federation allows foreign banks into its banking sector, its state-owned banks are the big and major operators.
Furthermore, in addition to a strong and target-oriented central government, an effective government administration is also needed that translates the overall targets into sectoral and line ministry targets and establishes frameworks to implement the strategies linked to the long-term vision. Like other BRICS, the Russian Federation recently implemented a number of reforms to raise civil servant performance levels, including the raise of wages to retain skilled employees.
In addition to more efficient institutions and public governance, tighter coherence between education policies and the needs of the economy would contribute to an enhanced competitiveness. The Russian Federation shows high educational attainment, but its tertiary education needs more flexibility to match skills needs and market demands. For instance, stronger cooperation involving business may be useful, and more internships could be developed. By 2020, government spending on education and research and development is to rise significantly and a new law on education aiming at adapting curricula is been implemented. In addition, life-long training should be encouraged since transformation in the economy may be rapid and make some jobs obsolete. The government has a key role to play in this, as private firms may have few incentives to finance the training of employees who could later be hired by competitors.
Technology acquisition and diffusion, and innovation
Once a country becomes more developed, innovation, i.e. the capacity to create new and better products and services, as well as new business models, is increasingly needed to sustain productivity growth and to compete effectively in global markets.
For Russia, a first important element of this is to develop means of taking better advantage of technology and knowledge that already exists, since there is room for technology absorption across Russian firms, in order to boost their productivity. Again, a sound business climate and the right incentives to invest are key in this aspect. This also involves, for instance,
imports of technology embodied in capital goods and components; technology licensing; getting technology, designs, production and management assistance from partners, consulting firms, technical experts, etc.
Beyond technology absorption, Russia has a great innovation potential, with a large science base inherited from the Soviet Union, strong positions in some science, industry and technology fields. The Russian government recognizes and promotes the strategic importance of innovation at all levels. But despite these favorable conditions, the economy differs and lags behind OECD countries on some measures of innovativeness1:
1. Manufacturing firms are less likely to engage in innovation activities than their OECD counterparts, with innovative activity of any kind reported by only 10% of firms, compared with 60% in the best performing OECD countries.
2. Country gross expenditure on R&D, now just above 1% of GDP, is only one-half the median OECD country level. Moreover, the business contribution to R&D expenditures is particularly small, amounting to only 0.3% of GDP, compared to more than 2% in leading OECD economies.
3. Two-thirds of overall R&D expenditure is financed by government in Russia compared with one third in most OECD countries. This illustrates low spending by business on innovation.
4. While SMEs make a substantial contribution to the innovation system in leading economies, in Russia their share of R&D expenditures is less than 2%, compared to more than quarter in leading OECD economies, and in 2010 only 1,6% of Russian SMEs spent money on innovation.
The strategy «Innovative Russia 2020» was accepted in 2011 with an aim to improve innovativeness and innovative climate of Russian economy. It sets ambitious objectives:
- to increase R&D expenditures to 2,5-3% of GDP (from the current 1,3%), with over 50% covered by private sector (from the current 33%);
- to increase share of innovative products in total Russian volume of production to reach at least 25-35% (from current 12,4%);
- total domestic expenditures for education should increase from 4,8% to 7% of GDP;
- government funding of fundamental research will be raised to EUR 3,9 bn. in 2020 (from EUR 0,5 bn. in 2010);
- funding to innovation infrastructure development will be increased to EUR 1,5 bn (from EUR 0,5 bn).
The first report about the results of this strategy was published in April 2013. The surveys point to improving environment and infrastructure for innovations, but low demand for innovation from the real sector remains
1 OECD (2014), OECD Economic Survey: Russian Federation 2013, OECD Publishing.
the main barrier for the commercialization of R&D, followed by administrative burdens and the quality of R&D results. While the system of key performance indicators is being increasingly introduced, excessive attention is still paid to monitoring inputs rather than outputs, and short-rather than long-term outcomes (Kuzyk and Simachev, 2012).
Existing support for business innovation is geared towards large business, and in particular state-owned enterprises (SOEs), with more than 80% of business investment in innovation in Russia currently carried out by large SOEs. However, the current strategy to stimulate innovation in those firms is mainly based on administrative and control measures. The strategic "Innovation Enforcement Initiative" was started in 2011. It involves 60 large SOEs which account for over 25% of Russian GDP and one third of industrial production. Participating enterprises are obliged to adopt and implement programs of innovative development based on technological audits and increase innovation spending oriented at improving labor productivity, energy efficiency and high technology. Stronger cooperation with higher educational institutions, scientific institutes and SMEs is also targeted.
A survey conducted in 2012 among two thirds of participating SOEs showed that they have considerably increased innovation spending, with about half of the funds spent on buying new machinery and equipment (Gershman, 2013). It is too early to assess the efficiency of such spending, but there may be a danger of meeting innovation commitments without a real impact on business activity.
The promotion of innovation in SME sectors is a priority for Russian economy and several instruments of support are being implemented, including the formation of Skolkovo Foundation near Moscow, 31 innovation technology centres in 19 regions, 80 techno parks in 35 regions, 25 cluster centres and mechanisms for promoting innovation cooperation between SOEs and SMEs.
However, the funds allocated to innovation in SME sectors are relatively small as compared to the size of other government R&D spending. For the period 2011-2013, the government has provided only 0,1% of GDP for all SME support programs, of which around 10% was directed at supporting innovative SMEs and 10% was allocated to developing support infrastructure, such as business incubator zones and technological parks.
Competition is already a key driver of innovation spending in Russia (and not only a driver of productivity growth - this is a priori not fully obvious, since, in some catching-up emerging economies, innovation spending rely sometimes on existing oligopolies that have the possibility to accumulate capital and to invest it in R&D, rather than being the result of competitive pressures). Available data indeed suggest that Russian firms operating in a more competitive industry environment, such as Russian
food processing sector, spend substantially more on R&D and show higher productivity1. Improving the business climate, with a special focus on stimulating competition, would therefore be one of the main steps towards increasing innovation in Russia.
Features of innovation implementation in the real sector
Over the last two decades of market economy Russian real sector has executed both extensive and intensive ways of development. Nowadays manufacturing companies are operating in a fast changing environment. In order to enhance competitiveness and productivity Russian companies must employ new technologies, headmost production processes and management tools. This requires continuous investment in R&D by the private sector and scrutiny and employment of advanced foreign technologies.
At present innovations of many Russian producers are mostly based on imported technologies. Unfortunately, not many Russian private enterprises have their own specialized R&D units. Such departments aimed at new products development are mostly initiated and established by large companies, not by SMEs. Therefore, the corporate model of innovation implementation is more developed in Russia, with the whole innovation process, from R&D to production and marketing is organized and controlled within large, mature enterprise with strong brand name, rich financial resources and advanced distribution network (Pyatanova, 2011).
For successful innovation it is insufficient to allocate resources, the quality of top-management and the level of corporate governance are also very important. Unfortunately, many top-managers of the real sector still underestimate the importance of marketing research and marketing management in innovation process. One of the main factors of fruitful innovation policy is also the ability to attract and retain talented people. However, some Russian producers attract expensive specialists only for the period of project development. Furthermore, one of the barriers to successful innovation implementation often becomes the lack of communication and integration between functional departments of the manufacturer. In such cases the solution can be in formation of cross-functional teams responsible for product development to improve cooperation and knowledge exchange.
To conclude in order to ensure Russia's sustainable competitiveness in the global marketplace, from business side a set of measures has to be taken including: modernization of enterprises and sophistication of production (aimed at a higher value added product structure of an economy); employment of innovative technologies, processes and management tools; improvement of marketing of Russian goods and
1 OECD (2011), OECD Reviews of Innovation Policy: Russian Federation 2011, OECD Publishing.
corporate image of the Russian counterparties; further development of corporate governance practices. From the governmental side further efforts should be made to diversify the national economy into higher value added and more technology-intensive sectors (market forces alone may not be sufficient to achieve it); improve business climate; upgrade and develop modern infrastructure; create conditions and policies for greater involvement of SMEs in economic life; facilitate further improvement of the Russian product, labour and financial markets efficiency; and last but not least, further development of education and science.
References
1. Buiter W. H. and Rahbari E. Global Growth Generators; Moving beyond „Emerging Markets' and 'BRIC', Citi Global Economics, 2011, February 21.
2. Gershman M. A. Programmy innovatsionnogo razvitiya kompanii s gosudarstvennym uchastiem: Pervye itogi [Innovation Development Programmes for the State-owned Companies: First Results], Foresight-Russia, 2013, Vol. 7, No. 1, pp. 28-43. (In Russ.).
3. Imbs J. and Wacziarg R. Stages of Diversification, American Economic Review, American Economic Association, 2003, Vol. 93, No. 1, pp. 63-86, March.
4. Koren M. and Tenreyro S. Technological Diversification, American Economic Review, American Economic Association, 2013, Vol. 103, No. 1, pp. 378-414, February.
5. Kuzyk M. and Simachev Y. Russia's Innovation Promotion Policies: Their Evolution, Achievements, Problems and Lessons, Russian Economy in 2012: Trends and Outlook, Issue 23, Moscow, 2013. (In Russ.).
6. Moreno L. La década de América Latina y el Caribe: una oportunidad real, Inter-American Development Bank, Washington, D. C., May 2011.
7. Pyatanova V. Strategiya i Konkurentnoye Preimuschestvo Kompanii [Strategy and Competitive Advantage of a Company], Moscow, Khlebprodinform, 2011. (In Russ.).
8. Turkisch E. Kozyri Rossiyskoy Economiki [Advantages of the Russian Economy], Nationalny Bankovskiy Journal, 2014, February. (In Russ.).
