Studies Eastern European Markets

Eastern European Markets


Alexey Prazdnichnykh & Kari Liuhto
Can Russian companies innovate? – Views of some 250 Russian CEOs

Electronic Publications of Pan-European Institute 21/2010

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In terms of GERD relative to GDP, Russia is positioned in the club of such countries as Estonia, Belarus, South Africa, and Ukraine. Russia slightly exceeds India, Turkey, and Chile, but she is behind China and the Czech Republic. GERD, in the group of countries to which Russia belongs, is less than a half that of such a group of countries as the United States, Germany, France, and Canada and less than a third of Japan, Finland, and South Korea. It is also visible that the scientific and technological achievements of Israel have not cost that country cheap in the literal sense of the term. Israel allocates 5% of her GDP to research and development, and this amount is increasing. Firm’s capacity for innovation can be thought of as a sum of three factors.

First is the ability to create new valuable technological knowledge to improve products and processes. Second is the ability to adapt technology and knowhow from various external sources. Third is the level of technology employed by the companies. The Russian firms do not rank high on any of these three components.

The share of businesses’ expenditure on research and development (BERD) in the Russian GDP is not very high (0.72%). This is more than in her CIS neighbours, and more than in Turkey, Chile or Brazil, but it is clearly less than in China. Regarding the ability to adapt technology and the present technological level, the Russian executives provide exceptionally low rankings compared to other countries.

According to the World Economic Forum’s Executive Opinion Survey, firms from Ukraine and Kazakhstan were more able to adapt technology, as well as had a more sophisticated technology at their disposal than enterprises from Russia.

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