Academic journal article Review of European Studies

The Problems and Prospects of Developing a System of Financing Innovation in Russia

Academic journal article Review of European Studies

The Problems and Prospects of Developing a System of Financing Innovation in Russia

Article excerpt

Abstract

The rate of development of the innovative sector of the economy depends on the effective formation of a system to finance it. The choice of a base model to support innovative start-ups and the monitoring of the levels of public and private capital at every stage of development are the key issues facing countries with transitive economies. The ability to gain a foothold in the global innovation market is dependent on how these issues are tackled. However, the process of forming a financing system for innovations is associated with a number of internal and external difficulties. This article will analyze the current model of support for innovative enterprises in Russia. Internal strengths and weaknesses will be compared with external opportunities and threats. The results obtained are summarized with the opinion of the main participants in the process. Finally, a number of recommendations conducive to the further development of the system of financing innovations will be proposed.

Keywords: Innovation Lift, development finance institutions, financing innovations, SWOT analysis

1. Introduction

Continuous development has always been an essential factor in providing an acceptable standard of living in any country. However, with increasing competition in the world market, the requirements for the rate of local economies' development have also increased significantly. One of the key methods to increase the pace of development and improve the quality of the key sectors of the economy is innovation. The issue of innovation in countries with transitive economy is of particular relevance, since in addition to ensuring a certain quality of life within the country, they are also faced with the task of advancement on the global market and the strengthening of their position within it.

An innovation is generally understood as a new development which has been brought to and is demanded by the market, providing a qualitative or quantitative increase in the efficiency of processes or products. Thus, we can say that an innovation is a result brought to the market, which is obtained through investing in a new technology or product. Historically, industries such as healthcare, military-industrial complex and high-tech production are those with the highest demand for innovations. In recent decades, IT-technologies have also been firmly added to this list. Together, these industries provide the necessary level of national security in the country.

At the same time, the question of innovation is closely linked to the methods of its financing. To this end, countries differ in terms of the participation of public and private capital in the financing of innovative projects, the sophistication of the banking system, the stock market and the legal framework protecting the interests of developers and investors. One of the key performance indicators of the system for financing and supporting innovative projects at various stages of their implementation is the level of their final commercialization. As a rule, this figure requires careful attention in countries with transition economies, in as much as not all processes have been established, and the level of interaction between participants is not high enough to provide the required output-rate of ready solutions onto the market.

Such is this situation in Russia today, moreover, while the innovation sector of the economy is faced with ambitious objectives in terms of the rate and quality of development. In particular, an increase of the Russian share of high-tech exports to 2% of the total world market and to 10% on the world nuclear energy, shipbuilding, aerospace and aircraft markets is planned by 2020. (The strategy of innovative development of the Russian Federation for the period up to 2020) Increased attention to the development of innovative projects is revealing pitfalls in the current financing system. Therefore, to be able to achieve a strong position in the international innovation market, the process of financing innovation projects from the pre-seed stage to the output of the product onto the domestic or international market must be clearly set up. …

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