How innovations are developing in Russia

Innovation is no longer just a way for companies to compete. At a time when the global economy is slowing down, trade wars are raging, and labor productivity is growing more slowly, innovation is a question of success in the development of the economy as a whole and country leadership, a repeat of the space race of the mid – XX century, but at the level of technology.

Russia is ranked 46th in the Global innovation index 2019 (its position has not changed in comparison with 2018). The experts evaluated 129 countries on 80 parameters, ranging from the number of applications for intellectual property rights and mobile applications created to the cost of education and the number of scientific and technical publications. The authors of this index-experts from Cornell University (USA), INSEAD business school (France) and the world intellectual property organization-identify a group of low – and middle-income countries where innovation is developing rapidly. Russia is among them, along with China, Brazil and Argentina.

The amount of investment in innovation is one of the key indicators of the country's interest in developing new technologies. There are several calculation methods that give different results in absolute numbers, but the proportion between the largest investors in innovation and the smallest remains. So, in the UNESCO ranking, Russia is in the top ten in terms of investment in R & d (this is a significant part of all investments in innovation), its investment experts estimated at $40.3 billion in purchasing power parity. But in terms of investment-to-GDP ratio, Russia is not even in the top 15 countries-UNESCO estimates this level at 1.1% of GDP (the global average is 1.7%, and for North America and Western Europe it is 2.5%).

Industry is most active in technological investments in Russia, according to experts from the Institute of statistics of the Higher school of Economics. 9.6% of all industrial companies, 8% of all companies in the telecommunications sector, and only three out of 100 agricultural companies invest in innovative developments.

"Just inventing something isn't enough," said Google co-founder Larry page. - Tesla discovered electric energy, which is used by all of us today, but could not transmit it to people. You need to combine both things: invention and focus on innovation, and have a company that commercializes the invention and gives it to people." Russian companies strictly follow this rule, not just ordering developments from specialized research institutes, but also creating their own R&D centers, finding ways to stimulate innovation that will allow them to get the greatest effect on business and increase its competitiveness. The companies surveyed by Vedomosti & estimated the percentage of successfully implemented developments at more than 80%.

The highest share of innovative products in the service sector is 14.5%, according to experts from the HSE Institute for statistical research. The share of expenditures that this sector invests in innovation is also higher – 2.3% of the total volume of products sold. For industry, this figure is 6.7%, and the share of costs is 1.7%.

Data from large companies surveyed by Vedomosti& show that investments in R & d and innovation account for between 2 and 7% of total company expenditures.

For example, PhosAgro, one of the world's leading producers of phosphate fertilizers,has an average R & d share of 7-7.5% of capex (38.7 billion rubles in 2018), says a representative of the company. According to him, only the funding of research and design and survey works performed by the research Institute for fertilizers and insectofungicides named after Professor Ya. V. Samoilov (NIUIF), which is part of the group, exceeded 1.1 billion rubles in 2018.

Severstal's investment in development in 2019 will amount to $48.1 million, its representative said. This is approximately 3.32% of Severstal's planned 2019 capex ($1.45 billion; but this year marks the peak of the company's five-year $2.5 billion investment program). The world's largest pipe manufacturer, pipe metallurgical company (TMK), has invested $15 million, or 5.5% of the company's total capital expenditures, in creating new products and qualifying tests, according to its representative. Russia's largest solar panel manufacturer Hevel in 2019 it is going to invest more than 1.5 billion rubles in R & d – about 2% of the capex, says a representative of the company. The capex of the largest Russian petrochemical holding SIBUR in 2018 amounted to 151.4 billion rubles.

Russian companies, like many of their foreign competitors, prefer to create their own R&D centers or otherwise accumulate research potential inside. Thus, the developments will be "targeted", built into the production process and tangible for financial indicators.

Source: https://www.vedomosti.ru/partner/articles/2019/10/09/813027-razvivayutsya-innovatsii

Posted: September 2020