New growth points: innovative clusters

The economist Artyom Shadrin speaks about the emergence of territorial production consortia in Russia

Labour productivity in Russia is still not growing as fast as we would like it to, while the projected demographic situation may lead to a shortage of personnel in the future. This makes the issue of promoting technological development by creating innovative territorial clusters – public-private partnerships between companies, authorities, research and educational institutions – particularly relevant.

Cooperation between business, science, and the government gets a structured organisational format in clusters. The state supports companies, involves them in the implementation of state programmes, and regulates innovation by introducing stringent technological requirements. The state’s participation in development of infrastructure, education, and introduction of favourable “rules of the game” helps entrepreneurs build long-term plans and invest more confidently. If authorities bear about a third of the “overall costs”, it should be enough for normal development of clusters. The other two thirds are distributed between businesses and R&D organisations. The cluster’s responsibility is to facilitate the preparation of, “package” new projects, and help to launch them. Essentially this is how a communication platform, and conditions for attracting funding are created.

Russia started to apply this approach in 2011, when the Ministry of Economic Development selected the first 25 innovative clusters and granted them subsidies. Very quickly a number of industry associations emerged in the regions: pharmaceutical, electronic, petrochemical, etc. To create synergy, in 2016 the Ministry proposed to merge them into larger consortia. E.g. digital bioinformatics clusters emerged at the junction of IT technologies and bioinformatics. So far such structures are just inching along towards becoming economically viable. However, Russian clusters do have a number of important results. The Kaluga and Kama innovative territorial production consortia received silver labels of the European Cluster Association, and several other associations received bronze ones. These awards are a world-class quality certificate for foreign investors.

A large number of top-level research and educational institutions are concentrated in Moscow, the economy is highly developed, and numerous investment companies are present. But there’s a problem of insufficient cooperation between business and science. It’s hard to integrate start-ups’ promising technological innovations into large companies’ business plans. This is where mentors from clusters can contribute, by helping to “pack” a business, make it interesting to investors, and map the fastest route from an idea to a mass-produced end product. The so-called “serial entrepreneurship” has the same objective, when a small group of people set up dozens of new businesses. In Western universities you can find entrepreneurs who are familiar with the market and know investors interested in promising projects. As a result, the “millionaire professors” concept has even emerged. This does not mean that scientists are now engaged exclusively in entrepreneurship. They simply hand their intellectual property over to a start-up, and receive licensing fees or dividends.

A number of major Russian corporations have set up venture funds by now. But it is difficult for companies to quickly organise the entire innovation process, from research to implementing the designs. It’s easier for market giants to find a start-up with a motivated team that has already done most of the work, acquire it, and integrate it. Indeed, hiring a well-worked team is a simpler solution than finding and grooming individual people. There are many such large companies in Moscow, so the city could invest in such venture funds. You just need to try to spot the right start-ups, consider promising young businessmen, and not be shy to offer them partnership.

This requires setting up innovative structures offering a wide range of services, equipment, and contacts with scientific and educational organisations. Speaking of which, in April of this year Russian President Vladimir Putin supported the idea of the Moscow Mayor Sergei Sobyanin to set up an innovation and production cluster in the capital. This is just one example of an integrated policy to improve productivity and promote technological development. It should make creating start-ups by investing intellectual property a systemic process, and help design more integrated industrial policy.