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When a good science base is not enough to create competitive industries: Lock-in and inertia in Russian systems of innovation

Rajneesh Narula and Irina Jormanainen (irina.jormanainen@hse.fi)
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Irina Jormanainen: Department of International Business, Helsinki School of Economics

No 2008-059, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: 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.

Keywords: innovation systems; R&D; Russia; inertia; institutions; research and development; lock-in; transition; competitiveness (search for similar items in EconPapers)
JEL-codes: L52 O14 O32 P31 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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