Competitiveness Report Underlines Importance of Innovation to Russia’s Growth Potential

Watch an interview with Margareta Drzeniek, Senior Economist at the World Economic Forum and browse the report below.

Over the past year, Russia has seen a negative trend in its competitiveness performance. The country’s productivity has been stagnating due to a number of shortcomings in the country’s business environment. Russia’s three key assets, the educated workforce, natural resources, favourable geographical location combined with an important market size could thus not be capitalized upon.

Going forward, the country will have to address five key challenges to raise productivity: (1) institutions will have to be upgraded and the rule of law must be strengthened; (2) improving the quality of education will be important for maintaining Russia’s human capital advantage (3) more intense competition and the fostering of entrepreneurship would significantly benefit the Russian economy; (4) continued strengthening of the resilience of financial markets and facilitating access to finance for business are key to economic growth; and (5) business sophistication will grow in importance in the future, as the country moves away from natural resources, so mechanisms to transfer knowledge and experience in this field need to be considered.

The special focus of this report is on innovation. A comprehensive national innovation framework should take into account short-term issues such as more focus on technological upgrading and not neglect long-term challenges such as support for innovative SMEs and higher public expenditure on R&D. This would enable the country to further tap into its innovative potential, which is based to a large extent on the availability of human capital and strong R&D capacities.