When a good science base is not enough to create competitive industries: Lock-in and inertia in Russian systems of innovation
Rajneesh Narula & Irina Jormanainen
#2008-059
Despite a well-developed science and technology base and considerable
industrial capacity during the soviet era, Russia has largely failed to
create a competitive industrial sector despite two decades of
transition. This paper seeks to understand why Russia has not succeeded
despite having relatively favourable initial conditions. We develop an
understanding of its innovation system and the interplay between the
firm and the non-firm sector. We argue that – in any economy - when
political and economic regimes were rapidly reformed, there is
considerable structural inertia associated with complex
interdependencies between the state, domestic firms and the formal and
informal institutions that bind them together. In the case of Russia,
this inertia has resulted in a system-wide lock-in, and industrial
enterprises continued to engage in routines that generated a sub-optimal
outcome. Market forces did not result in the western-style innovation
system, but a hybrid one, with numerous features of the soviet system. A
significant segment of industry maintains a Soviet-style dependence on
‘top-down’ supply-driven allocation of resources and a reliance on
external (but domestic) network of sources for innovation and capital.
At the same time, ‘new’ firms and industries have also evolved which
undertake their own R&D, and utilise foreign sources of capital and
technology, and at least partly determine their production and
innovative activities on the basis on market forces.
Key words: innovation systems, R&D, Russia, inertia, institutions,
lock-in, transition, competitiveness.
Jel Codes: O32, O14, P31, L52
UNU-MERIT Working Papers
ISSN 1871-9872