Determinants of Regional Innovation in Russia: Are People or Capital More Important?

Spending on innovation increased annually in the 2000s in Russia’s regions, but innovation productivity varies greatly between regions. In the current climate of sanctions between Russia and Western countries and limitations on international technology transfer, there is a growing need to analyse the factors infl uencing regional innovation. Previous empirical studies using a knowledge production function approach have found that the main factor of growth in regional innovation is increasing spending on research and development (R&D). Our econometric analyses show that the quality of human capital, a product of the number of economically active urban citizens with a higher education (the so-called creative class) has the greatest infl uence on the number of potentially commercializable patents. Other signifi cant factors were buying equipment, which indicates a high rate of wear and tear of Russian machinery, and spending on basic research. Th e ‘centre-periphery’ structure of Russia’s innovation system favours the migration of highly qualifi ed researchers to leading regions, which weakens the potential of the ‘donor regions’. However, at the same time, we see signifi cantly fewer limitations on knowledge spillovers in the form of patents and — in this case — proximity to the ‘centres’ is a positive factor.