This study is part of a series of OECD country reviews of innovation policy.1 It was requested by the Russian government, represented by the Ministry of Education and Science of the Russian Federation, and was carried out by the OECD Directorate for Science, Technology and Industry (DSTI) under the auspices of the Committee for Scientific and Technological Policy (CSTP).

The challenge of diversifying Russia’s economic structure and reducing its reliance on natural resource sectors has loomed large on the policy agenda for well over a decade. Even during the boom years before 2008, there was widespread awareness that growth was being driven by transitory factors and that steps were needed to facilitate Russia’s transition into self-sustaining, investment- and innovation-led growth. Since late 2008, the global financial and economic crisis has underscored the importance of this challenge. Attention has therefore increasingly focused on modernisation and, in particular, on innovation, as the keys to Russia’s successful development over the long term.

This chapter provides an overview of Russia’s economic performance over the decade preceding the global financial and economic crisis. The severe, though brief downturn of the Russian economy is discussed with a view to drawing some lessons for the future. It highlights some salient features of the country’s economy, including its openness to international trade and foreign direct investment (FDI), the structure of production and trade, and patterns of change. It looks at major aspects of the framework conditions for innovation, the improvement of which is a key means of boosting Russia’s overall innovation performance. Next, it looks at the relationship between innovation and growth, both globally and in Russia, and explores the particular reasons why innovation policy should be a particular priority for Russia at present. Finally, it provides an overview of Russia’s innovation performance and offers some conclusions.

The definition of a country’s innovation system has major implications for the balance and mix of policies needed to improve innovation system performance and for the amount of communication and co-ordination required to create holistic innovation policies. To the extent that countries operate within the confines of a narrow “innovation system map” focused on science and technology and the formal research and development (R&D) system, they are likely to be guided towards policy choices that optimise the formal part of the system at the expense of the whole. However, with the emergence of a broader perspective on innovation systems over the last decade or so, governments increasingly tend to develop more holistic innovation and research policies. With this broader perspective in mind, this chapter provides an overall assessment of the innovation and research activities of the business sector and of the public science and education systems, and of the stock and flow of human resources. It begins with business firms, the central actors in any well-functioning innovation system. It explores the explanations of low levels of R&D spending and broadens the perspective on innovation by firms to take account of non-R&D and non-technological innovation. It then considers the public sector research system, with particular attention to the academies of science and the higher education sector. A final section covers the human resource dimension of innovation.

Governments have important roles to play in shaping the performance of their national innovation systems. Beyond the support for R&D, a wide array of public policies needs to be mobilised covering areas as diverse as education and training, competition and trade, and industrial and regional development. These policy areas utilise a mix of instruments, including regulation and direct funding. The coherence and effectiveness of this mix and of overall governance arrangements are major concerns for innovation policy makers. This chapter provides first a brief account of the evolution of Russia’s STI policy over the last two decades, paying particular attention to the main actors and their roles and the achievements and shortcomings of the prevailing governance arrangements. It then considers the public funding of R&D, specifically the overall trends in budgetary support, the main funding patterns by institutional type, and the use of selectivity and priority programmes. This is followed by a functional assessment of Russia’s innovation policy that takes a number of strategic tasks as its starting points. These include securing the availability of qualified human resources; adapting public R&D institutes to the requirements of a modern innovation system; promoting business R&D and innovation; fostering the development of competitive innovation-oriented industries; providing supporting infrastructure to innovators; harnessing global opportunities through international co-operation; and developing and mobilising regional innovation capabilities. The chapter finishes with some concluding remarks.