1 Alexander Belyaev, BRICS meeting, April 2007 State University – Higher School of Economics Institute for Statistical Studies and Economics of Knowledge State University – Higher School of Economics Institute for Statistical Studies and Economics of Knowledge Policy for innovative Development in Regions of Russia

2 Uneven Spatial S&T Potential & Innovations Distribution The S&T Potential & Innov. Activit. are distributed very uneven: - Overly concentration of S&T, Innovating Enterprises in Moscow and Saint- Petersburg -More than 50% of S&T and Innovations Spending is in Central District (incl. Moscow) - Ural Distruct, South District, Far East District - 6%, 3%, and 2 %, of total S&T and Innovation Expenses. (Moscow (Moscow Saint-Petersburg

3 Innovative Regions Development Policy Instruments Present Federal Policy Instruments for Promotion of innovative and S&T Development in Regions include: 1) Techno-parks promotion Program ( ) 2) Special Economic Zones 3) “Science Cities” Policy

4 Technoparks Promotion Program March 2006: Established a Government Program “Promotion of Technoparks in high technologies sector of Russia” Goal: Fostering Development of high-technology Sectors of Russian Economy Total Spending is about $1 Bln to 2010 Main Feature: Building of Infrastructure Objects in Technoparks on Budget Expenses No established Technopark support criteria set; Decision about Government support is met individually in each case by Government. Today: 7 Technoparks are supported

5 Programm Support Measures But important: - The main and nearby only Russian Business demand for such a Program was Tax reduction for Technopark Residents - But Tax reduction wasn’t included as a fostering Measure. Program Support Measures include: 1) Providing of Land 2) Building of Infrastructure Objects on Budget Expenses “Infrastructure objects” include: - Office buildings - Production facilities - Engineering infrastructure - Roads, transport infrastructure - Housings for Employees - Social Infrastructure

6 Support Funding volume & Technoparks specializiation - Dubna (Moscow) - $6,5 Mio in 2007, $230 Mio. Total Specialization: Software, Pharmaceuticals, Petrochemical technologies - Peterhof (Saint-Petersburg) - $16.15 Mio. in 2007, $130,7 Mio total Specialization: Information Technologies, Communications, TV systems, - Novosibirsk (Siberia): $26.15 Mio. In 2007, $169,23 Mio. In General Specialization: Information Technologies, Biotechnologies, Professional Equipment - Nizhniy Novgorod (South): $25 Mio. In 2007, $119,23 Mio. In General Specialization: Information Technologies, Chemical Technologies, Bio- and Medical Technologies - Tatarstan (South): $16.15 Mio. In 2007, $111 Mio. Total. Specialization: Information Technologies, Oil Chemical Technologies, Biotechnologies - Tyumen (Siberia): $23,07 Mio. In 2007, $115,38 total. Specialization: Innovations in Oil and Gas areas - Kaluga (Central): $30,76 Mio. in 2007, $134,6 total. Specialization: Biotechnologies, Pharmaceuticals

7 Program Implementation Stages : - Establishing of Program Coordinating Authority - Building of Infrastructure Objects - Settling of Russian Residents (Investors) : - Attracting of TNCs to place innovative Production in supported Techno-parks

8 Program Management 1) Program Coordination Authority, incl: - Government representatives - Professional Associations - R&D Organizations, Higher Education Institution, - Main Technopark Investors Coordination Authority sets approach to calculate pricing for utilizing of government-builded infrastructure objects and provided Land. 2) Techno-park Managing Company. Is being chosen by Program Coordinating Authority for each Techno-Park. Main goal: to perform Technopark development. Funding source: Residents of Techno-park Funds are allowed to spend in two ways only: - Technopark Infrastructure Development - Promotion and Marketing actions for Technopark Residents

9 Special Economic Zones (SEZ)

10 Special Economic Zones: Overview December 2005: Established 6 Special Economic Zones (accord. to “Special Economic Zones Law” pass. July, 22nd, 2005) Federal Budget 2006: approx. $300 Mio. Budget subsidies for Capital Investments in SEZ 1) SEZ of production type Goal: to Foster High-Technologies Production in Russia Goal: to Foster High-Technologies Production in Russia 2) SEZ of Innovative Type Goal: to Foster innovative Products Development, Commercialization of R&D, IT Products and Software Development

11 Location of Special Economic Zones Zelenograd (Moscow) Zelenograd (Moscow) Dubna (Moscow Dubna (Moscow Saint-Petersburg Tomsk Elabuga Tatarstan Elabuga Tatarstan Lipetsk

12 Support measures: SEZ of production type 1)Tax preferences: Tax Vacation: Transport Tax, Assets Tax, Land Tax – Elimination for 5 (10) Years 2) Custom clearance regime preferences 3) Simplificated Administration Regime; 4) Building Infrastructure Objects at Budget Expenses: - Engineering Infrastructure - Roads, Transport Infrastructure - Social Infrastructure

13 Support Measures: SEZ of Innovation type -Income Tax Reduction: 17,5% to 13,5% - Accounting of R&D Expenses at Time of factual Spending (not R&D Contract closing) - Social Tax Reduction from 26% to 2-14% - Transport Tax, Assets Tax, Land Tax – 0%

14 Foreign Residents Boeing Bombardier Inc. Chevron Cisco Systems Hewlett Packard Intel Siemens

15 SEZ Tomsk (Siberia) Specialization Information Technologies, Electronic Devices, New Materials & Production Technologies development, Nanotechnologies, Biotechnologies, Medical Technologies Potential Residents «Gazprom» (Gas Monopoly) «Migrogen» (Medicals) «Technosnabexport» (Nuclear Materials an Technologies) «В.А.В.С.» Main Resident «SIBUR- Tomskneftekhim», a Subsidiary of “SIBUR” Oil Company Projects: Development and Production of Super Molecular Polyethylene Production of new Titanic-Magnesium Catalyzator for Petrochemical Production

16 “Science Cities”

17 Science City – a Soviet S&T Policy Instrument “Science Cities” are likely oldest territorial specialized S&T Structures of Russia Science Cities were build in U.S.S.R. in 30-s, 50-s, 70-s years Main Goal: Solving of Science and Technology problems of strategic Importance. Primarly: in Areas of National Defense and Nuclear Technologies. At the Present: - Approx. 70 Science Cities; 29 in Moscow Region. - Science Cities represent more than 40% of S&T Potential of Russia.

18 Features of Science Cities 1) Only R&D & Higher Education Institutions are settled (more than 70% of Science Cities have own Higher Education Institutes) 2) Absence of Agriculture and Production Facilities 3) Main Population consists of Scientists and their Families 4) Fully External providing of Resources, in U.S.S.R % Budget Spending - Fall of the U.S.S.R. - Decrease of Government R&D Spending: 10 to 20-fold led to a very difficult economic & social Situation in Science Cities.

19 Science City Policy Policy Goals: -Achieving of Self-Sufficiency - Preventing of S&T Potential Destroying - Transforming into Commercialization-ready R&D Results Sources April 1999 was passed the “Science City Status” Law. According to Law for each City: A “Science City” Status is being given by the President of Russia for a Period of 25 years In Parallel the President approves: - Priorities List for the Science City Research, Innovation, Education etc. Activities; Accordingly to S&T Development Priorities List - A Government Science City Development Program Support Funding Volume: : about $71 Mio : about $31 Mio.

20 Conclusion 1)Applying Regions Innovative Development Policy Instruments is relatively new for Russia (2005 – SEZ, 2006 – Techno-parks) 2) Efficiency of this Policy cannot be evaluated at the present 3) Traditional Innovation areas are being fostered (Dubna). Lack of Policies for turning underdeveloped into innovative Areas 4) Spatial Distribution of State Support Expenses remains shifted towards European Areas.

21 Thank you!