Clusters: Fashion trend or investment driver?

Moscow will soon have an innovation cluster with an IT platform linking potential developers of new products/services and innovators looking for partners for a high-tech project at its core. It will be also provide for contacts with the authorities and state corporations and online application for state support. The city legislature has adopted a relevant law on February 19. 

Creating clusters is an old industrial policy tool in Russia; some experts even call cluster policy “mainstream in sectoral competition with other countries.” But what are the real results of the industrial clusters policy? Is this model ideal, or does it need to be improved? Invest Foresight asked two reputable experts to answer this question: Rector of Plekhanov Russian University of Economics Viktor Grishin and Director of the Innovative Development Department at the Ministry of Economic Development Artyom Shadrin.

Credit: Aleksandr Astafev | RIAN

Viktor Grishin, Rector of Plekhanov Russian University of Economics:

– According to the observations of experts in our university, the cluster policy, or creation of an innovative business environment through the cluster approach, has effectively shown good results in a number of Russian regions since 2012, when the Russian Government announced this policy as part of its Strategy for Russia’s Innovative Development 2020. There are examples of highly successful areas such as Tatarstan and the Kaluga Region, where clusters have been formed and are growing on a solid foundation of the existing industrial potential. However, I would like to note a much smaller cluster (relative to the above examples), which has good development prospects – the Smolensk Linen Cluster established by Vyazemsky Engineering Plant, Vyazemsky Flax Mill and the Smolensk Region government. Their combined efforts have created a full value chain, from flax cultivation to linen products manufacturing, which still has the potential for further development and expansion by adding members to the cluster.

One of the key advantages of the innovation cluster is creating a comprehensive production chain that includes both full cycle of work and targeted scientific developments financially supported by relevant ministries, as well as personnel education and training. The full cycle implies reduction of manufactured product’s cost and thus increasing production’s marginality, which is the direct interest of the business. In this regard, Moscow’s innovation cluster is a unique venue that has an unprecedented number of decision making centers concentrated on its territory and involved in the work. The project implies a prompt commercialization (that is, creating added value) of the innovation sector’s initiatives, with an opportunity for efficient synchronization of Moscow’s resource base which is represented by 173 educational institutions, 719 scientific organizations, 15,670 IT organizations, 7,240 hi-tech manufacturing enterprises, and others. Prompt involvement of these structures in the innovation cluster requires competent administrative support, development of inter-industry relations, and stimulating startups through financial and non-financial support measures by a fund to be founded by Moscow Government.

Artyom Shadrin, Director of the Department for Strategic Development and Innovations, Russian Ministry of Economic Development

– Clusters allow for attracting investments due to the concentration of technology in areas with a significant scientific, personnel and innovative potential. Representatives of businesses, government and research institutions take part in forming cluster development strategy, which provides an opportunity to initiate and implement large joint projects that cannot be done by companies alone. This also lowers the risks and increases investments.

For instance, the Kaluga Region began developing its innovative pharmaceutical cluster after a successful experience in creating a car assembly cluster. While attracting investments, the region supports personnel training and the development of new medicines within a specialized technology park and engineering center. The region has become a location for production facilities of leading Russian and foreign pharmaceutical companies. A project is being currently developed to create a ‘technology valley’ based on the Obninsk branch of the National Research Nuclear University MEPhI.

Another important example of a new kind of cluster will be Moscow’s innovative cluster, which will deal with building multilateral communication between hundreds of enterprises, research and educational organizations and financial institutions in order to boost the growth of hi-tech companies, increase the number of new technology startups, expand the venture market volume and increase direct investments.

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