Real Economy and Virtual Reality in Russia’s Innovation Policy

26.2.2018
ALEKSANTERI INSIGHT 1/2018. Existing research has overlooked both the emerging consensus around the new concept of a technological revolution and a fundamental contradiction between the ‘real’ and digital economy at its core, writes Anna Lowry.

In just the last four years, Russia has adopted major strategic documents in science and technology. These include federal laws on strategic planning and industrial policy (2014), the Strategy of the Scientific and Technological Development of the Russian Federation (2016), and the Digital Economy of the Russian Federation programme (2017). The fast pace of change in policy-setting raises issues regarding the coherence and direction of Russia’s innovation policy. The contradictions, as seen by scholars of Russia’s innovation policy, range from the conceptual differences between modernisation and innovation, catch-up and overtake strategies, openness and self-sufficiency through their mediation and contestation in the political realm down to the specifics of implementation, with its own problems and inconsistencies. However, by focusing on the contradictions of Russia’s innovation policy every step of the way from conceptualisation to implementation, existing research has overlooked both the emerging consensus around the new concept of a technological revolution and a fundamental contradiction between the ‘real’ and digital economy at its core.

Russia’s innovation policy has been marked by the increasing convergence of two approaches.

Russia’s innovation policy has been marked by the increasing convergence of two approaches. Earlier, it emphasised re-industrialisation and industrial breakthrough, which has been followed by digital economy initiatives. It remains to be seen to what extent these approaches can complement each other, being rooted, on the one hand, in the desire to nurture the ‘real economy’ through industrial strategy and, on the other hand, to spur transition into a data-centric economy. This apparent contradiction is not specific to Russia, as many developed and developing economies have sought to pursue ‘new’ industrial policy alongside digitalisation initiatives.

However, the Russia-specific problem lies in the failure of previous government modernisation efforts, such as Strategy 2020, to link up with the country’s industrial development strategy. The emphasis on the ‘industrial’ in Russia’s development strategy has been somewhat belated, and the re-industrialisation discourse has been increasingly submerged into the broader digitalisation campaign. Thus, some Russian analysts are concerned that recent innovation efforts might lead to another de-industrialisation rather than a successful technological transition.

Central to both re-industrialisation and digitalisation initiatives is the idea of an industrial or technological revolution, which is a global phenomenon associated with the transition from mass production of standardised goods to flexible manufacture of individualised products. A number of developed economies have declared the technological revolution a new priority of innovation policy, seen as a solution to the problem of declining rates of productivity growth since the early 2010s. This problem is even more acute in the Russian context.

Furthermore, Russia faces a set of specific challenges that are significantly shaping its technological transition. These include economic sanctions introduced by the EU and the US in 2014 and the fall in oil prices since 2015. As a response to these challenges, the Russian policy-making community has formed consensus regarding the inadequacy of the previous model based on resource extraction and the launch of a new national project, Russian Technological Revolution. Although its priorities have yet to be incorporated into the existing strategic framework, the recent report New Technological Revolution: Challenges and Opportunities for Russia (2017) by the Center for Strategic Research is an important step in this direction.

Anna Lowry is a Postdoctoral Researcher at the Aleksanteri Institute and a fellow at the Academy of Finland Centre of Excellence, Choices of Russian Modernisation.

 

More about the subject: Society & economy