Innovation activity in Taiwan and Russia

Table 1 Asia-Pacific Top 10 (The Global Competitiveness Index 2014-2015)

Source: The Global Competitiveness Report 2014-2015

Note: *2014-2015 rank out of 144 economies

Government budget for S&T in 2014 was NT$ 93.82 billion. The total R&D expenditure continued to grow nearly four years, the ratio of R&D expenditure of GDP was a stable growth, from 2.83% in 2009 to 2.94% in 2012. From the perspective of executive department of R&D spending, enterprises spending were the highest, followed by government, higher education and private non-profit sector. R&D spending by enterprises was growth annually from NT$ 282.546 billion in 2010 to NT$ 343.456 billion in 2013. Government expenditure was declining annually NT$ 63.02 billion in 2010 to NT$ 60.99 billion in 2013.

Source: Ministry of Science and Technology, 2014

From the perspective of the source of R&D funding, the ratio of enterprises input in nearly four years was 70% and keep increasing. Enterprises R&D funding was NT$ 343,238 million (75.5%) in 2013. Government R&D funding was NT$ 106,692 million (23.5%).

Source: Ministry of Science and Technology, 2014

R&D human resources mainly include researcher, technician, and support staff. Researcher was 60.2% of R&D human resource in 2013 which was the largest proportion. Support staff was the smallest proportion and keep declining. It's 5.2% of total R&D human resource. The R&D manpower per 1,000 labor is 12.8 in 2013, which only behind Finland, higher than South Korea, Sweden, Japan, France, Canada, America, Germany, England, Russia and Mainland China. The major education level in R&D manpower was master degree, which average proportion was 53% in nearly four years. The percentage of Ph.D was increasing from 17.6% in 2010 to 18.5% in 2013. Thus, the proportion of bachelor, master and doctor level of R&D manpower was 28.2%, 53.3% and 18.5% in 2013.

Source: Ministry of Science and Technology, 2014

Nowadays, Taiwan is the second largest TFT-LCD supplier in the world, ranks fourth in semiconductor manufacturing, and is third in information technology. Taiwan government has over time generously supported non-profit R&D institutions engaged in technological development. These government-funded organizations have embedded themselves into the “triple helix” model of university, industry, and government to facilitate the implementation of national innovation and technological policies. The Industrial Technology Research Institute (ITRI) is the most visible and dynamic. Hsinchu Science-based Industrial Park (HSIP) has also played a critical role in forming synergistic industry clusters that upgrade Taiwan's domestic industry. These institutions have functioned largely like hubs facilitating the triple helix model of technology development in Taiwan by forming a partnership network integrating Taiwan government, universities and enterprises. Chia-Yi Chen, Yu-Ling Lin and Po-Young Chu, “Facilitators of national innovation policy in a SME-dominated country: a case study of Taiwan,” Innovation: Management, Policy & Practice 15 (2013) Taiwan's government will continually enlarge national R&D funding for maintaining industrial development advantage, keeping technology innovative capability, developing advanced research area, building world top research society, improving industrial rate of value added, and upgrading technology innovation efficiency. In Taiwan's 2020 industrial development strategy, government will focus on metal machine industry (intelligence automobile, intelligence robot, green metal material, high value-added metal material, etc), information electronic industry (green optoelectronics, cloud computing, large-sized AMOLED displays, etc), chemical industry (biotech material, high-level medical equipment, etc), livehliood industry (functional foods, fashion design textiles, etc.). Therefore, we can understand the future government policy will forward to energy industry, high value-added material and intelligence product.

2. CASE STUDY-RUSSIA

Russia accounts for almost a quarter of the world gas market, is one of the two largest oil producers, and the fourth largest producer of electricity. Because of its rich resource base, Russia plays a crucial role in global energy and resource markets. With a population of 143.7 million people in 2014, Russia is the world's ninth most populous nation, including 140 recognized nationalities and 40 ethnic groups. Moscow, the capital of Russia, is the most populous city in Europe. Russia is a middle income country that strives to move to a high income status.

Russia's economic model relied on fossil fuel production and exports. However, the question for Russia is how to use the revenues of hydrocarbon more effectively and efficiently. Fruitful energy resource with strong social and economic policies made a rapid social and economic progress in Russia, also allowed Russia to weather the global crisis well. But like other major hydrocarbon producers, these resources are the source of Russia development challenges. Relative to its structural endowments and trade potential, Russia appears to be under-exporting. Only approximately 9% of total exports in 2009 were accounted for by high-tech exports, mainly from the defense industry. There has been some shift to services over these years, but still the economic structure is dominated by large enterprises and companies with concentration in natural resource and low value-added industries. The challenge of diversifying Russia's economic structure and reducing its reliance on natural resource sectors has loomed large on the policy agenda for well over a decade. Nowadays, Russia keeps working on national innovation system to inspire companies get success by innovation. Russian government starts to build a good innovation ecosystem. Thus, Innovation is the key to Russia's successful development over the long term.

2.1 Russia economic development

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a globally-isolated, centrally-planned economy towards a more market-based and globally-integrated economy. The era of former President Boris Yeltsin in power, political situation had been volatile and economic reform twists and turns. In 1998, a devaluation of the ruble turned financial crisis in Russia. Russian state finances nearly collapse and economic growth rate showed negative 4.9%. While the devaluation of ruble in 1999 favorable export expansion and the effect of lower import substitution industries. Part of light and food processing industry recovered, and the latter half of the rise in international oil prices. Russian energy export earned, and showed 5.4% of economic growth in 1999. But basically, the Russian economy was still difficult. Overview 1990s economic development in Russia, it could be said that the former Soviet planned economy to a market economy in transition pains for 10 years.

Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. Russian economy, which had averaged 7% growth during 1998-2008 as oil prices rose rapidly, was one of the hardest hit by the 2008-2009 global economic crisis as oil prices plummeted and the foreign credits that Russian banks and firms relied on dried up. Slowly declining oil prices over the past few years and difficulty attracting foreign direct investment have contributed to a noticeable slowdown in GDP growth rates. In late 2013, the Russian Economic Development Ministry reduced its growth forecast through 2030 to an average of only 2.5% per year, down from its previous forecast of 4.0 to 4.2%. In 2014, following Russia's military intervention in Ukraine, prospects for economic growth declined further, with expectations that GDP growth could drop as low as zero. Under this situation, Russia's Ostpolitik policy now is the main strategy in Russia. Russia plays a bridging role between the cross-border transport in Asia and Asia-Pacific countries. And Russia is willing to work with Asia-Pacific countries for developing Russian Far East Energy, promoting science and technology cooperation projects and satellite launching.

2.2 Russia industrial development

1) Planned Economy (-1990)

In the Soviet economy from the early 1930s the highest priority sector was the planned economy and within that the defense industry, like the rest of Soviet industry entirely state owned. The defense industry manufactured civilian goods and some of goods with relatively high technological level. Almost all high technology manufacturing in the USSR was undertaken within the defense industry. In 1990s, almost 80% of all industrial R&D undertaken in Russia was performed by the defense industry, and 70% of product was for military purpose. Cooper, J., Society-military relations in Russia: the economic dimension. In S. L. Webber, & J. G. Mathers (Eds.), Military and society in post-Soviet Russia (2006): 131-156. (Manchester: Manchester University Press) Over decades, the industry enjoyed top priority in resource allocation with high quality, best material and equipment input, high financial resource. With attractive condition, the industry owned high skilled personnel from designer, engineers and operators that were the vital character to the industry's success.

2) Policy of structural reformation (2000-2003)

Russian Federation worked on conceptual document, including in relation to domestic and industrial policy (CSR, 2000) in May 2000. The industrial policy was focus on supporting for market principles and institutions: various conditions for competition, deregulation, and reforms of natural monopolies, the tax system, the authorities, the administrative apparatus, etc. In February 2001, a special federal program “Electronic Russia (2002-2010)” was initiated, and approved in early 2002. Approved by the Resolution of the Government of the Russian Federation no. 65, Jan 28th.2002. The aim of Electronic Russia was to raise the efficiency to Russian economy. This program expanded information and communications technology (ICT) industry to a large scale and expanded specialist training in this field. It became a rare example of a horizontal industrial policy geared towards development of the ICT sector, primarily by removing unjustified administrative barriers and stimulating additional demand.

3) Vertical sectorial policy (2004-2007)

In 2004, Russian Federation special program was accomplishing the state's objectives and raising the efficiency in the public sector. The Ministry of Economic Development of the Russian Federation, the initial instigator of the “horizontal ideology” behind the ICT program, turned its attention to other, larger-scale projects. ICT market player was not formed well since the initial stage of implementing was not strong and solid. Subsequently, evolution of special program as an ordinary departmental program by the then Ministry of Information Technology and Communications of the Russian Federation in that time was natural and expected.

In this period of time, the role of Russian government in the economy was turn towards a vertical industrial policy. Cooper (2013) Cooper J. (2013) summarized the factors and prerequisites behind this shift were:

• the alignment of the `power vertical', the reduced influence of large-scale business on the authorities, and purposeful planning of structural changes in the economy;

• the relaxation of budget restrictions, the increased financial capabilities of the state;

• the stabilization of conditions for business activity, the improvement in the performance of obligations making it possible to implement long-term projects.

Since 2005, there has been a sharp increase in the state's interest in long-term planning instruments. The reformers were particularly interested in opportunities to expand private co-financing and quantitative performance targets. This transformation is benefit for department to designed industrial policy. In 2006-2007, the update structure of priority social and economic development objectives became clear, such as diversity of economy and innovation. Russian government formed financial development institutions and expanding their resource base in 2007. Russian government used approximately 300 billion rubles from the National Welfare Fund to fund into development institutions Message from the President of the Russian Federation to the Federal Council of the Russian Federation, April 26th, 2007, i.e. Vnesheconombank State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” operates to enhance competitiveness of the Russian economy, diversify it and stimulate investment activity operates to enhance competitiveness of the Russian economy, diversify it and stimulate investment activity., Investment Fund, Russian Venture Company (RVC), etc. Vnesheconombank and Rusnano -- were set up as financial development institutions to make up for “market failure”; two others -- ROSATOM and ROSTEC -- were viewed as instruments and agents to restructure state property, consolidate state assets and raise the competitiveness of certain sectors (the nuclear industry, military-industrial complex, automotive industry, air travel) (Simachev, Kuzyk, 2009) Simachev Yu., Kuzyk M., Public corporations: Main directions and trends of development in 2007-2008, Russian economy in 2008: Trends and outlooks, 30 (2009): 468-489 (Russian). Vneseconom bank and Rusnano were the most important driving forces behind the industrial policy.

4) Compensatory industrial policy (end of 2008-2009)

The automotive industry, agricultural equipment manufacturing, military-industrial complex, agriculture, transport complex, and residential construction were identified as sectorial priorities. Because of serious economic crisis at the end of 2008, Russian government forced to transfer the objectives from strategic into tactical (Gorst et al., 2009) Gorst M., Danil'tsev A., Kuznetsov B., Kuzyk M., Simachev Yu., Yakovlev A., Evaluation of Anti-crisis Measures Supporting the Real Sector of the Russian Economy, Voprosy Economiki 5, (2009): 21-46 (Russian). Russian government set a serial measures to stimulate innovative development. The Presidential Committee on Modernization of the Economy had a strategic technology priority which included energy, energy efficiency, nuclear, information and space technologies and telecommunications, medicine, pharmaceuticals and nanotechnology in June 2009.

5) Technology industrial policy (2010-)

In this period of time, industrial policy is characterized by state efforts to introduce new horizontal policy instruments (Simachev, Kuzyk, 2013) Simachev Yu., Kuzyk M., Russia's Innovation Promotion Policies: Their Evolution, Achievements, Challenges and Lessons, Russian Economy in 2012. Trends and Outlooks 34, (2013):521-571 (Russian). Russian government worked on technology platform, matching funding to stimulate enterprises and universities in innovative activities. An innovation-oriented developmental system was build. The support for the creation of regional innovation clusters also established. At the end of 2011, after protracted adjustments and revisions, the Innovative Development Strategy for the Russian Federation up to 2020 was approved (Ministry of Economic Development, 2012). The ideas of reindustrializing the Russian economy (in many respects inspired by the European example), creating new employment in high-tech, and fundamentally improving the business environment received widespread support. In January 2012, the need for an industrial policy was first discussed at a high political level. Among the possible priorities were pharmaceuticals, high-tech chemistry, composite and non-metallic materials, the nuclear and aviation industries, ICT, nanotechnology, and the space industry (Putin, 2012). Putin V., We need a new economy, Vedomosti, Jan 30, 2012 (Russian) In May 2012, two fundamental landmarks were named as part of the long-term economic objectives for the country: increasing by 1.3 times the proportion of output from high-tech and science-intensive economic industries of total GDP by 2018 relative to 2011 levels; creating and modernizing 25 million highly productive jobs by 2020. Decree of the President of the Russian Federation `On long-term state economic policy' no. 596, dated May 7th, 2012. In July 2013, action plans on the development of five technological industries were approved in the new form of road maps, focusing on the implementation of practical measures up to 2018. These five industries were: biotechnology and genetic engineering, ICT, engineering and industrial design, composite materials production, and optoelectronic technologies and photonics. Simachev Yu et al., Russia on the Path Towards a New Technology Industrial Policy: Exciting Prospects and Fatal Traps, Foresight-Russia 8 no.4 (2014).

According to the information above, Simachev Yuri et al. (2014) Simachev Yu et al.,(2014) had identified four stages in the development of Russian industrial policy in the 2000s. Table 5 shows the stages in the formation of Russian industrial policy

Stages in the formation of Russian industrial policy in the 2000s

Source: Simachev Y., et al. (2014)

2.3 Russian national innovation system

Russia's innovation potential is probably greater than many other countries and Russia has a number of advantages in knowledge and innovation. By international standards, Russia has a highly educated population. The country benefits from a substantial science base and a well-developed education system in science and technology. The basic science and technology infrastructure was built from USSR. However, indicators of actual innovation activity remain small. Despite a high level of R&D inputs, Russia still lags well behind OECD and other large middle-income countries in R&D outputs. There seems to be a clear imbalance between the public resources devoted to knowledge creation and the observed outputs in terms of innovation as well as stimulating greater private-sector involvement in R&D, which remains limited. These issues constitute some of the major challenges for Russian innovation policy. Russian national innovation system helps Russian government to adjust their innovative policy and understand interactions among institutions by providing information and rules of the game; reducing uncertainty, such as technical service system and intellectual property law; facilitating the flow of resources for innovation, such as the establishment of venture capital; managing conflicts and cooperation, such as the cooperation between government, industry and academia can coordination between departments, enterprises, and research departments; how to resolve conflicts in the old system after the introduction of new technologies arising; providing incentives for innovation, encouraging innovation and entrepreneurial, out of lack of innovation enterprises, to provide the necessary resources innovation. Figure 4 shows the Russian innovation system which proposed by OECD.

Figure 4 Russian Innovation System

2.4 Government policy and implementation of nis in russia

Russian government has made a lot of progress in the formulation of innovation policy and the creation of innovation system. Peltola (2008) Peltola, K.K., (2008) identified that there were 3 main policy priority directions initiated by government. (1) growing attention to forecasts and foresights; (2) support of innovation infrastructure; (3) further development of indirect measures to stimulate innovation. Even Russian had made progress in the development of innovation policy. Still these policies had weaknesses such as:

• Absence of large high tech companies

• Low participation of business in financing R&D

• Underdeveloped SME sector

• Absence of policies aimed to improve inter-sectorial knowledge and technology diffusion, lack of intermediary organizations

• Ineffective technological infrastructure for innovations

• Low level of development of linkages among actors of the innovation system

There is a wide gap between much Russian R&D and the demands of the market. Russian science and technology policy has inherited a strong defense character and has a strong focus on the R&D and lack of diffusion of innovations. Russian policy has usually tended to focus on supply orientation and neglect demand of consumer. Technology commercialization is the important concept that government needs to focus on. And government needs to support more on market orientation. Innovative development develops intensively by cooperation between public and private institutions, in order to make the process more effective.

The legislative branch has been involved in the S&T policy-making process since the early years of the transition. The Duma, the Russian lower chamber, is quite active, mainly via its Committee on Science and High Technology, in discussing and amending laws and priorities. It has, for instance, added the management of natural resources to the five presidential priority areas. It has also helped to draw up the list of critical technologies. The Council of the Federation - the higher chamber representing the regions - also plays a role in the S&T policy-making process, mainly through its Committee on Education and Science. OECD, OECD Reviews of Innovation Policy: Russian Federation, 2011

OECD (2011) OECD, 2011 identified functions and institutions in National Innovation System. Many ministries and agencies have historically shared responsibility for managing innovation-related programs and budgets. Subject to the stability of the government structure, the main actors will remain: the Ministry of Education and Science, the Ministry of Economic Development, the Ministry of Defense, the Ministry of Trade and Industry, the Ministry of Communication and Mass Media, the Ministry of Finance, as well as the two major mission-oriented agencies in charge of the space and nuclear programs. The Ministry of Education and Science has been an important proponent of innovation policy in Russia. It controls some 20% of the civil R&D budget. It is also in charge of national foresight exercises; it completed one for 2020 and is embarked on a new one for 2030. The Ministry of Economic Development has initiated a number of measures to support small businesses: tax incentives for R&D, venture capital, technoparks and industrial zones. The Ministry of Defense controls probably in excess of 50% of the total government budget appropriations or outlays for R&D. Precise figures are unavailable as much of the defence R&D budget remains classified. The Ministry of Industry and Trade, which controls significant amounts of resources for R&D in industry, is responsible for a number of sectors that were managed by branch ministries in Soviet times (aviation, electronics, machines, etc.) and in which many industrial R&D institutes continue to operate. The Ministry of Communications and Mass Media plays a key role in the development of the information and communication technology (ICT) sector, either as industry or as enabling infrastructure. It controls the R&D for information technology, and has initiated large-scale programs such as e-Russia which aim at speeding up the development of Internet equipment and use in the country. The Russian Space Agency, Roscosmos, created in 1992, is in charge of the entire Russian civil and military space program, including research, commercial launching activities and exploration missions. It manages almost 25% of the civil budget. Ministry of Finance exerts strong control over the use of public money invested in S&T and innovation. This function necessarily entails some friction with the “spending” ministries. economic industrial innovation productivity

The Russian Academy of Sciences (RAS) is a key factor in the overall innovation system. It has several regional affiliates: the Urals, Siberian and Far Eastern branches. It controls some 15% of the civil R&D budget. Recently RAS reformed that aims at reducing its autonomy and decision-making power. In order to facilitate the development and commercialization of technologies considered of strategic importance for the competitiveness of the economy in a global context, the government created in 2007 three powerful organizations, fully owned by the state, which are Rosnano, Rostech and Rosatom. Rosnano is the corporation in charge of promoting the development of nanotechnologies and related industries. It received at its creation RUB 130 billion from the federal budget. Rostech is in charge of the state's equity shares in more than 500 companies. Operating in many different sectors and technological fields, it is supposed to facilitate the development, production, marketing and after-sales services of new technologies, particularly military ones, in domestic markets and abroad. Rosatom controls all parts of the nuclear chain: exploration of uranium fields, nuclear fuel, reactor development and production, reactor operation and sales. It oversees 200 enterprises (nuclear stations, uranium mines, fuel processing plants, specialized equipment, etc.), and its 70 research institutes employ a total of 300,000 persons. It operates on global markets and is much influenced by diplomatic and intergovernmental relations. It obviously has an important influence on both the demand and supply sides of part of the Russian innovation system.

Three autonomous foundations provide funding on a competitive basis to individual researchers and innovators:

• The Russian Foundation for Basic Research (RFBR), which, according to law, should channel 6% of the civil R&D budget;

• The much smaller Russian Foundation for Humanities (RFH), which supports social science research;

• The Foundation for Assistance to Small Innovative Enterprises;

In following part, this study shows significant industrial parks that play a vital role now in Russian innovation system.

The market of industrial parks in Russia is still emerging, as the majority of the parks are still at the planning stage. However, there is no common understanding and unified term in this field, as a result of which absolutely different types of objects - from techno parks to logistic terminals and special economic zones- are referred to as “industrial parks”. Russian industrial parks are more likely to choose a managing company after the completion of all work on the project. The services package for residents varies from minimum, e.g., security and maintenance, to maximum, including design and construction services, fund raising, infrastructure development and management, recruiting, catering, cleaning, and real estate leasing services. Another really important factor which makes an industrial park a comfortable place for business is tax incentives and subsidies offered by the regional government, e.g., a reduction of tax rates for income, property, transport and land. By locating a business in an industrial park, company can enter the Russian market in the shortest time and with predictable costs when opening a new enterprise. More than half of the 80 industrial parks in Russia are private, a figure that rises to 65 if Russia count public-private partnerships - significantly higher than the share of the public sector itself. This increase in the share of state projects reflects the government's increased attention in recent years to implementing effective mechanisms to attract direct investment. Ernst & Yong, Industrial parks in Russia: Map and industry survey, 2011,

Special economic zones (SEZ) are one of the most effective instruments of attracting investment to Russia. Now there are 28 special economic zones of 4 different types:

• Six Industrial and production zones (in Republic of Tatarstan, Lipetsk, Samara, Sverdlovsk, Pskov and Kaluga regions);

• Five Technology and innovation zones (in Moscow, Saint-Petersburg, Tomsk, Dubna (Moscow region) and Republic of Tatarstan);

• Fourteen Tourist and recreational zones (in Republic of Altai, Republic of Buryatia, Altai Territory, Stavropol Territory, Primorsky Territory, Irkutsk region, also there is cluster in the Krasnodar Territory, Republic of Ingushetia, Republic of Dagestan, Republic of North Ossetia-Alania, Republic of Adygeya, Kabardino-Balkar Republic, Karachi-Cherkess Republic and Chechen Republic);

• Three Port zones (in Ulyanovsk, Murmansk regions and Khabarovsk Territory).

SEZs in Russia are located in the most developed regions. There are high technology enterprises, scientific and research laboratories in the zones. By December 2013 there were 338 residents in the special economic zones, including leading foreign companies from 24 countries. The total volume of scheduled investments is more than US $12 billion. Residents of technology and innovation zones obtained 350 industrial patents. The SEZ residents' products are in demand, and this indicates the high potential of SEZ as a tool to support innovative companies, through which residents compete successfully in the global market. Ministry of Economic Development of the Russian Federation, Special economic zones in Russia,

The Skolkovo Innovation Center is a planned high technology business area being built at Skolkovo near Moscow, Russia. It aims to be the “Russian Silicon Valley.” Skolkovo is Russia's largest state-sponsored innovation hub, and it received state funding around $4 billion till 2020. Skolkovo was announced in 2009 by Prime Minister Dmitry Medvedev. The Foundation involves a business school, office space for hundreds of startups, and as many as 15,000 scientists. The purpose of Skolkovo was to help Russia transit into the digital age. Russian government plan to lead Russia become a global technological and economic leader by Skolkovo. Russia has a wealth of scientific and technical talent, but its cultural legacy does not promote entrepreneurialism, and many talented people leave for other, more vibrant, stable and mature environments.

The new Russian strategy document for innovation policy entitled “Innovative Russia 2020” was approved by the government and signed by the Prime Minister Vladimir Putin on 16 December 2011. Russia's long-term economic development strategy to the year 2020 envisaged three stages. The basic tasks and directions during each of these stages were identified as follows:

• First stage (2008-2012): Prepare the institutional mechanisms needed to bring about economic reform, modernize the education and public health sectors, and commence projects related to the development of high technology and infrastructure;

• Second stage (2013-2017): Move towards an economy based on new technologies such as information and communications, biotechnology, and nanotechnology;

• Third stage (2018-): Strengthen the status of Russia in scientific research and development, and stabilize and develop an innovative economic system;

The main tasks that Russian had to address were development of resources and expansion of production infrastructure. The main tasks suggested as part of the long-term economic development strategy for the economic sector included development of Russia`s regions and human resources, improvement of the business and investment environment, development of innovative national systems, diversification of industries, increase of the competitiveness in the high technology sector, development of infrastructure, and development of potential resources. The key topics of the Strategy 2020 now are: new growth model, preconditions for growth, new social policy, balanced infrastructure development, and effective state.

2.5 THE PERFORMANCE OF NIS IN RUSSIA

In the WEF Global Competitiveness Report 2014-2015, Russia was ranked 53rd out of the 144 economies worldwide and the 2nd in BRICs. Russia has some improvements related to the efficiency of goods markets (in particular domestic competition), ICT use, and business sophistication-- although this arguably reflects some positive developments that took place before the Ukraine conflict started. World Economic Forum, The Global Competiveness Report 2014-2015

Table 6 BRIC (The Global Competitiveness Index 2014-2015)

Source: The Global Competitiveness Report 2014-2015

Note: *2014-2015 rank out of 144 economies

Government budget for S&T in 2014 was $366,860.9 million rubles. The total R&D expenditure continued to grow nearly four years, the ratio of R&D expenditure of GDP was growth, from 0.51% in 2009 to 0.53% in 2013. From the perspective of executive department of R&D spending, enterprises spending were the highest, followed by government, higher education and private non-profit sector. R&D spending by enterprises was growth annually from $303,051.1 million rubles in 2009 to $ 408,284.4 million rubles in 2012. Government expenditure was also growth annually $ 147,023.1 million rubles in 2009 to $225,267 million rubles in 2012.

Unit: million rubles

Source: Science and Technology Indicator in the Russian Federation, 2014

From the perspective of the source of R&D funding, the ratio of government input in nearly four years was 66%. Government is the main funding resource for R&D. Enterprises R&D funding was $474,789.8 million rubles (27.2%) in 2012. Government R&D funding was $190,545.9 million rubles (67.8%).

Unit: million rubles

Source: Science and Technology Indicator in the Russian Federation, 2014

R&D human resources mainly include researcher, technician, and support staff. Researcher was 50.3% of R&D human resource in 2012 which was the largest proportion. Technicial was the smallest proportion. It's 10.3% of total R&D human resource. The major education level in R&D manpower was master degree, which average proportion was 50% in nearly four years.

Unit: Full-time Equivalents, %

Source: Science and Technology Indicator in the Russian Federation, 2014

3. PERFORMANCE ANALYSIS OF NIS IN TAIWAN AND RUSSIA

In 2014, Taiwan's population was 23.45 million and its per capita GDP was US$ 20,900 (Directorate General of Budget Accounting and Statistics, 2014), Directorate General of Budget Accounting and Statistics. Statistical Yearbook, Republic of China. Directorate General of Budget Accounting and Statistics, Taipei, 2014 which compared to Russia's population of 142.15 million and per capita GDP of US$ 14,600 (Federal State Statistics Service, 2014). Russian Federal State Statistics Service, 2014 Compared to Russia, Taiwan is a small and high-income economy, while Russia is a large and catching-up economy. These differences influence the diversity of national innovation systems in these two countries. The following part shows how the functions and interactions of the innovation systems work in Taiwan and Russia.

3.1 Institution functions

Technology and innovation policy formulation

Technology and innovation policy formulation in Taiwan is based on the achievement of consensus at several national levels of conferences or meetings. The Ministry of Science and Technology (MOST) is responsible for the overall execution of S&T plans, while other relevant government agencies have established their own advisory offices for implementing the R&D practices of the agency. In contrast, President of the Russian Federation ensures coordinated functioning and interaction of public authorities, defines the main directions of state policy in the development of NIS, and the main directions of scientific-technical and innovation policy. Each national S&T plan outlines the main direction of S&T development. The performers of S&T activities fulfill the tasks assigned to them from above and depend upon official allocations for necessary resources. OECD, OECD Country Review of the Russian Innovation Policy “National innovation system and state innovation policy of the Russian Federation”, 2002

Performing R&D

The major performers of R&D in Taiwan are business enterprises, government, higher education, and private non-profit, which accounted for 74.2, 14.2, 11.3%, and 0.3% of national R&D spending in 2012, respectively (Taiwan Statistical Data Book 2014). Enterprises are the primary performers of R&D in Taiwan, but Taiwan's industry is dominant by SMEs, which generally lack resources to devote to R&D. Therefore, Taiwan's government has established a series of financial subsidy policies for enterprises to share their R&D risk. Government and enterprises are the two major R&D performers in Russia. In 2012, the R&D expenditure of government, business enterprise sector, higher education sector, private non-profit sector, funds from aboard, which accounted for 67.8%, 27.2%, 0.8%, 0.1%, and 4.0% of national R&D spending. Higher School of Economics National Research University , Science and Technology. Innovation. Information Society, 2012

Financing R&D

Taiwan's R&D expenditure has been rising steadily. According to the statistics of Taiwan's Ministry of Science and Technology (2014), its national R&D expenditure increased from NTD 263.3 billion (2.32% of GDP) in 2004 to NT$ 431.3 billion (3.06% of GDP) in 2012. In term of R&D expenditure as a percentage of GDP, Taiwan is now approaching the level of those countries that are most active in R&D investment. R&D funding comes from four sources, namely business enterprise, government, higher education, private non-profit, and aboard sources. The share of these actors of national R&D expenditures in 2012 was 74.1%, 24.8%, 0.9%, 0.2%, and 0.1%, respectively. Taiwan Statistical Data Book 2014 Taiwan's industry is the most important actor in its innovation system, not only in R&D implementation, but also in R&D financing. Meanwhile, the government is the second largest source of R&D funding in Taiwan, and provides most of the funding for R&D activities in universities and research institutes.

Russia's R&D expenditure almost triples from 2.5 million rubles in 1995 to 6.1 million rubles in 2012 (Science and Technology Indicators in the Russian Federation, 2014), demonstrating that Russia has enormously increased its R&D intensity. Russia's S&T expenditure is mainly financed by three sources, that is, the government, industry and funds from aboard, whose ratios of national S&T expenditures in 2012 were 67.8, 27.2, and 4.0%, respectively. Russia's government is the only major sources of S&T funding in its innovation system. The industry provides most of their funding for their own R&D activities, while the government is the main source of S&T funding for both research institutes and universities

Promotion of human resource development

Taiwan had 128 researchers per 10,000 labors in 2012, a ratio similar to that in the US, and demonstrating that Taiwan has plentiful human resources for S&T activities. Several specific organizations are responsible for different levels of the education and training of S&T personnel in Taiwan: for example, the Ministry of Education (MOE) is responsible for educating the S&T personnel, the MOST is in charge of training academic and research institute researchers, and the Council of Labor Affairs is responsible for training researchers working in private sectors. In addition, the selection of qualified personnel to study abroad with full government support, overseen by the MOE, is an important policy for fostering high R&D personnel and acquiring innovative technology from overseas. The selection standard is based on national development needs, and the personnel accepted for the program must return Taiwan to work for a certain period. In contrast, the number of researchers per 10,000 labors in Russia was 122 in 2012 Higher School of Economics National Research University, Science Indicators: 2014; World Bank, Key development indicators, 2014. Many talented Russian scientists and engineers prefer to conduct research and tests at well-equipped foreign scientific centers. Russia must systemically create innovative infrastructure for supporting creative scientific teams; create a favorable environment for innovative activity.

Technology bridging

Bridging institutions in Taiwan act as intermediaries between technology suppliers and demanders select specific technologies suitable for development in Taiwan and transfer innovative technologies to enterprises within Taiwan's innovation system. For example, ITRI, which is not only an important R&D performer in Taiwan but also an important bridging institute. The technology bridging institutions in Taiwan are characterized by emphasizing direct guidance and support for specific fields of innovative technology based on national innovation direction in order to concentrate and allocate relevant R&D resources.

As at the end of 2011 and 2013, Russia has largely developed an “innovations lift” -- system of state-created development institutions that support innovative projects at various stages: from pre-seed and seed stages to extension and restructuring. Currently, the system includes some 70 organizations. Potential of “innovations lift” performance growth is far from being exhausted. Actions of development institutions are sometimes of inconsistent character: industries, finance and support stages overlap; different eligibility criteria are imposed to candidates; there is no long-term financing and project withdrawal policy. Starting from the second stage of implementation of the Strategy, development institutions will focus on overcoming existing gaps and performance gain of the current infrastructure. Russian Venture Capital, Public Analytical Report on the Progress of Implementation of the Strategy for Innovative Development of the Russian Federation for the period until the year 2020. Release II, 2014

Promotion of technological entrepreneurship

Taiwan used to rely on its cheap and high quality human resources to gain a competitive advantage in manufacturing, but has recently lost this traditional advantage as neighbors such as China have adopted a similar competitive strategy. However, during the previous economic boom period, Taiwan has established a mature venture capital and incubation environment, as well as its people having high entrepreneurial capacity. From 1983 until 2011, a total of 312 venture capital firms have been established in Taiwan, and these firms have raised total funds of over NTD 128 billion, and accumulated over NTD 1.4 trillion in capital Taiwan Venture Capital Association, 2012, http://www.tvca.org.tw/. Venture capital has been an important source of financing for Taiwan's start-ups, particularly in high-tech industries. Furthermore, Taiwan's entrepreneurial incubation institutions have successfully supported and incubated numerous high-tech companies.

In the late 2000s, the first practical experience in creating a venture capital industry in Russia demonstrated that none of the forms of business ownership applicable at the time was fully consistent with the practice of venture capital investment. The most common form -- LLC, CJSC, OJSC -- did not provide the required flexibility for the relationship between investors and companies involved in innovation activities, while greatly hindering operations of parties to the contracts. Over the past years, an increasing number of technological startups have been observed in such fields as IT, education, healthcare, energy, etc. Many Russian startups offer technologies and solutions that are unique not only to Russia, but also to many countries worldwide. Intensification of entrepreneurial activity and development of business competences among students of higher education institutions are preconditions for creating a favorable environment for technology and intellectual property commercialization. Although the Russian students and researchers have considerable fundamental training potential, they often lack knowledge about the ways of practical implementation of their ideas. If higher education institutions launch project-based training programs using new approaches, this will allow using the synergy of amalgamation of students and professors and eliminating the innovative gap step by step.

3.2 Interactions of institutions

R&D collaboration

Taiwan's industry is dominated by SMEs, which have difficulty in competing with foreign companies alone (Hsu and Chang, 2000). Hsu, W.S., Chang, P.L., Innovative models of small & medium sized enterprises--case studies of industry-university cooperative projects. Journal of Technology Management 5 no.1, (2000):167-187 Taiwan's government has worked at promoting and developing relationships among enterprises, research institutes, and universities in order to cope with pressure for innovation. R&D collaboration has become an important innovation policy for complementing the research resources of each institution in Taiwan, in which research institutes are engaged in both critical and shared technology development, universities dominate basic research, and industries commercialize the results of R&D collaboration.