National Innovation Systemand Inequality:

Russia

Thiruvananthapuram, India, August 19-21 2009

Stanislav Zaichenko

2

Inequality patterns in Russia

•Historical trends

•Interpersonal inequality

•Interregional imbalances

•Inequality by social groups

3

Historical trends

•Feudal

•Estate

•Class

•Socio-economic

Until 1861

Until 1917

Until 1991 ?

By now

Inequality patterns

Period

4

Interpersonal inequality

0.289

0.410

0.4150.410

0.405

0.409

0.403

0.397

0.397

0.395

0.400

0.394

0.390

0.385

0.387

0.409

0.398

0.25

0.27

0.29

0.31

0.33

0.35

0.37

0.39

0.41

0.43

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Gini coefficient

26.6%

3.1%

7.8%

2.1%

14.1%

14.7%

39.5%

76.4%

12.0%3.7%

1990 2003

Self-employment business activities

Wages

Social transfers

Rent

Other income

Income structure

5

Interpersonal inequality: not a problem?

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 10000 20000 30000 40000 50000 60000

South Africa

Brazil

China

Russia

India

USA

CanadaUK

EU(25)

France

Gin

i co

eff

icie

nt

GDP per capita (PPP), USD

Germany

Belgium

Denmark

Italy

Spain

Greece

Mexico

Thailand

Singapore

Japan

Finland

AlgeriaIsrael

Iran

South Korea

Hong Kong

Australia

Argentina

Chile

Egypt

Uruguay

Norway

Ireland

6

Interregional imbalances

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0 5000 10000 15000 20000 25000 30000 35000 40000

Gin

i coeff

icie

nt

Income per capita, RUR

Moscow

Nenets Autonomous

District

Yamalo-Nenets Autonomous District

Chukotka Autonomous

District

Khanty-Mansi Autonomous

District

Tyumen District

Sakhalin District

Natural resources – related industries

(except Moscow)

Depressive regional economies

7

Interregional imbalances and innovation

974

183

401

289

801

325

380

115

Central Federal District

Including Moscow

Northwestern Federal District

Southern Federal District

Volga Federal District

Urals Federal District

Siberian Federal District

Far Eastern Federal District

34

10

15

5

31

10

11

1

Central Federal District

Including Moscow

Northwestern Federal District

Southern Federal District

Volga Federal District

Urals Federal District

Siberian Federal District

Far Eastern Federal District

10706

2658

5752

1571

7540

2384

585

26944

3482

1516

1630

813

3226

964

268

4716

Organisations performing innovation

Production of innovational goods and services, million $

PPP

Organisations performing technology transfer

Expenditure for technological innovation, million $ PPP

Specialisation: Manufacturing Natural resources quarrying and mining Administration/finance Other

8

Inequality by social groups:adaptation mechanisms failure*

72

57

56

15

Households with 3 or more underagechildren

Households with 2 underage children

Households with disabled persons

To compare: able-bodied coupleswithout children

Poverty risk, %

* 2003 NOBUS data

9

NSI and inequality co-evolution

•NSI and production orientation

•Access to infrastructure:–health & education

–knowledge

–finance

•Employment, output and wages–Employment and output controversial

dynamics

–Informal employment as an adaptation mechanism

–Productivity failure

•Regional disparities in competence building and production

10

NSI and production orientation

12.38%

12.11%

5.41%

4.77%

4.75%

60.58%

Saudi Arabia

Russian Federation

Norw ay

United Arab Emirates

Canada

Other reporters

Petroleum, petroleum products and related materials, gas, natural and manufactured: world exports by

country, %*

* 2006 UN COMTRADE data

11

Lack of high-tech orientation

Share of civil high tech products exports in the total national products exports by country, %*

54.6

40.6

28.9

28.7

28.2

26.5

26.1

21.4

20.4

20.2

1.6

Malta

Luxembourg

Ireland

Korea

China

UK

USA

Cyprus

Sw itzerland

Hungary

…

Russia

* 2006 UN COMTRADE data

12

Access to infrastructure: health*

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Population Obligatory medical insurance Federal budget

Medical services expenditure structure

6 7 7

474849

2005 2006 2007

Willing to purchase medical services soon

Willing to purchase medical services but unable to afford

% of respondents

* The Federal State Statistics Service data

13

Access to infrastructure: education*

* The Federal State Statistics Service data

2.6

5.7

12.6

Secondary education

Professional education

Higher education

Monthly average expenditure for education services,% of average monthly household income

6 5 6

2325

27

2005 2006 2007

Willing to purchase educationservices soon

Willing to purchase educationservices but unable to afford

% of respondents

14

Access to infrastructure: knowledge

3.1

2.8

0.8

0.5

0.8

To do my job better

To advance vocational knowledge and skills

To earn more money

To change the nature of job

Other

Reasons for LLL (refresher courses), % of respondents

Attending LLL (refresher courses) total = 4.6%

56

23

18

3

Employer

Employment agency

Respondent

Other

Who paid for LLL (refresher courses)?, % of attending respondents

15

Access to infrastructure: knowledge (cont.)

9

5

20

35

Personalcomputer

Internetaccess

Purchased

Willing to purchase butunable to afford

Personal access to knowledge networks, % of respondents

16

Access to infrastructure: finance

Russian Foundation for Basic Research

Russian Foundation for Humanities

The Foundation for Assistance to Small Innovative Enterprises

4.4%

0.7%

1.1%

Federal goal-oriented programmes

Budgetary foundations 6.2%

39.1%

Competitive funding

45.3%

Direct funding of government R&D

institutions

54.7%

Russian Academy of Sciences

Branch Academies of Sciences

26.3%

5.7%

Moscow State University

0.5%

Other organisations22.2%

17

Employment & output: controversial dynamics

155.8%

146.6%

137.9%

131.4%

121.5%

111.6%

108.2%105.2%

96.8%

88.8%93.3%

92.4%

71.9%71.9%73.6%76.2%78.7%

82.1%83.7%84.7%83.4%83.7%88.5%

100.0%

94.5%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Industrial output, % to 1995 Employees, % to 1995

18

Employment & output: “sanitization”

21.9%

8.9%

12.8%

18.4%

16.0%

20.8%

30.9%

19.1%

14.1%

26.8%

3.2%

7.7%

Industrial Output

Employed

Natural resources extraction

Production and distribution of electrical pow er, gas and w ater

Low tech manufacturing

Medium low tech manufacturing

Medium high tech manufacturing

High tech manufacturing

Structure of output and employment by industry, % (2007)

19

Nature of employment: informality

Share of informal employment in total income, %

3.1

28.1

26.0

26.627.5

20.2

1990 1995 2000 2003 2005 2007

20

Nature of employment: back to inequality

Regions by regional poverty level and share of informal employment in income per capita (2007)

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Reg

iona

l pov

erty

leve

l, %

Share of informal employment in income per capita, %

21

Productivity failure

Monthly wages by industry, RUR

394.7

290.1

867.6

284.6

277.9

2832.2Natural resources extraction

Production and distribution ofelectric power, gas and water

Low tech manufacturing

Medium low tech manufacturing

Medium high tech manufacturing

High tech manufacturing

7459

13268

10925

10290

12828

23145

Value added per one employee, thousand

RUR

22

Regional disparities in competence building and production

23

Conclusion: inequality balance

Interregional inequality

Resources redistribution

Preserving non-

innovation activities

Preserving depressive

regions

Innovation

Infrastructure

Learning

Mobility mechanisms

Negative factors Positive factors

Con

str

ain

ts

Insti

tuti

on

al /

macro

econ

om

ic

failu

res

Inn

ovati

on

/ b

usin

ess p

ote

nti

al

24

Conclusion: push-pull adaptation today

PUSH:

“Homemade” adaptation

mechanisms

PULL:

Centralised budget system

Inequality / poverty

Households

“self-eating”

State“self-

eating”

Survival

< Income structure transformation

< Consumption structure mobilisation

< Wealth redistribution mechanisms

25

Conclusion: comprehensive push-pull scheme

PUSH:

“Homemade” adaptation

mechanisms

PULL:

Adaptation / mobility policies

Inequality / poverty

Short-termshock

protection

Long-termassistance

Development

< Income structure transformation

< Consumption structure mobilisation

< Risk groups addressed policies

< Mobility assistance:• education• labor• location

< Infrastructure:• knowledge• finance• basic

< Health: more flexible insurance

< Local budgets: more autonomy

Single framework