Why Do Inefficient Innovative Institutions Have Place in Russia and Ukraine?

Abstract

Russia and Ukraine remain a high scientific potential in the comparison with a level of development of their economy. However, the innovative development of the economy is moving at a rate that significantly slowly in contrast to many transition economies (e.g. China). Why do inefficient innovative institutions have place in Russia and Ukraine? We have shown that the innovative institutions had been formed in the USSR in the late 1920's - early 1930's, when they solved the political tasks. Today these institutions have not changed and they are a cause of the failure of innovation. A model for estimating the losses from the inefficient institutions of innovation in Russia and Ukraine (in comparison with the institutions of innovation in the developed countries) are constructed. This model takes into account the presence of excessive licensing procedures as a result of the imperfect innovative institutions and corruption. It is shown that the losses due to the inefficiency of the innovative institutions are connected to the losses from corruption and shadow economy. For example, in Ukraine the imperfect institutions of innovation were lost to 20-30% of the funding. The comparison of the mechanisms of innovation in the developed countries and in Russia and Ukraine has been discussed in detail.)

Keywords: innovative institutions, transitive economy, comparative analysis, Russia, Ukraine

JEL Classification: B15, I28, O32, P21