State innovation policy
theme 4
  1. The definition and objectives of the state innovation policy
  2. State scientific and technical policy of the Republic of Belarus
  1. The definition and objectives of the state innovation policy
State innovation policy is an element of socio-economic policy, which expresses the attitude of the state to innovation activity, determines the goals, directions, forms of activity of public administration bodies in the field of science, technology and realization of achievements of science and technology.
The main objectives of the state innovation policy are:
  • 1
    creation of economic, legal and organizational conditions for innovation activity
  • 2
    increase of production efficiency and competitiveness of domestic commodity producers on the basis of creation and distribution of basic and improving innovations
  • 3
    promoting the activation of innovation activity, development of market relations and entrepreneurship in the innovation sphere
  • 4
    expansion of state support for innovation activity, increasing the efficiency of the use of state resources directed to the development of innovation activity
  • 5
    assistance in expansion of subject's cooperation in realization of innovative activity
  • 6
    implementation of measures to support domestic innovative products on the international market and to develop export potential
All models of economic development, which showed their effectiveness in the second half of the twentieth century, are characterized by a close interrelation of industrial, social and innovation (scientific and technological) policy of the state.
The implementation of innovation-industrial policy in a single complex with social policy allows to combine economic and social progress. For this purpose, many states have carried out and are carrying out a policy of increasing the paying capacity demand of the population.
The purpose of such a policy is the faster growth of labor costs in relation to the growth rate of consumer prices.
The experience of foreign countries shows that the participation of the state in the innovation process is becoming more and more important. In the USA, for example, a special term "semipublic" (semipublic) economy has appeared, which represents the tendency to strengthen links between private companies and public administration. This trend has arisen because today the formation of national competitive advantages depends not only and not so much on external investments and companies' activity, but on the purposeful policy of the state at the national and international levels. In addition, industrial policy focused on the stimulation of innovation is impossible without an appropriate social policy of the state.

When studying the foreign experience of formation and implementation of innovation-active industrial policy, another important characteristic is noted: regional programs of socio-economic development in developed industrial countries began to be developed and implemented much earlier than the national programs. This is explained by historical characteristics, in particular, by the fact that the state industrial policy of these countries was initially dominated by the anti-crisis aspect, and the crisis processes in industry were different in certain territories.
Two types of anti-crisis regional policy can be identified.

The first one is related to the renovation of the technological and industry structure of old industrial regions. The goal is to update technologies in traditional industries and increase the share of new industries in the industrial structure of the region. Thus, the industrial policy for this type of regions is focused mainly on the structural reorganization of industry.

The second type of anti-crisis regional policy is aimed at socio-economic development of depressed regions. As a rule, their depression was associated with the depleted opportunities for the development of coal or other mining industries. Other industries in such regions had to be practically created anew. Accordingly, the development program of such a region had to contribute to the formation of the optimal structure of industrial complexes created on this territory.
"Tennessee River Valley Program"
A classic example of such a program is the "Tennessee River Valley Program" adopted in the 1930s in the United States. It provided for the creation of a large number of new industrial enterprises of energy profile on a vast territory on the basis of construction of hydroelectric power plants. Within the framework of this project the Roosevelt government on the basis of a special law created a public corporation "Tennesi Valley Authority". It was this corporation that, with the help of federal and regional funds, as well as bond issues and private investments, carried out large-scale construction works (hydropower, transportation, irrigation, etc.) in the region, ensuring its industrial development.
Rather often the tasks of reforming the industrial structure of regions are tried to be solved through the creation of special zones. As practice shows, special zones can help to solve the following problems: restoration of productivity of previously lost lands and industries, creation of jobs for residents of the areas, development of cooperation between the public and private sectors, development of innovations.
The experience of creating special zones in Belgium, France, Spain, Great Britain and the USA allows us to classify them as follows:
  • free trade zones
  • industrial production zones
  • technology innovation zones
  • service zones (service zones)
  • complex zones
Special zone programs provide a variety of stimulus options from the regional policy toolkit. Instruments used in special zones:
  • 1. Tax incentives
    • in the sphere of income taxation
    • in the sphere of crediting
    • in the sphere of property taxation
  • 2. Freeing from customs duties of imported equipment (having no national analogs)
  • 3. Capital grants
  • 4. Exemption from corporate income taxes
  • 5. Exemption from taxes on shares
  • 6. Investment loans
  • 7. Exemption from local property taxes and other local taxes
  • 8. Employment incentives
  • 9. Refuse work bonuses and loans to foreign personnel (except for rare occupations)
  • 10. Exempting foreigners from income tax in case of rare occupations
  • 11. Support for investment funds
  • 12. Subsidization of projects
The limited period of special zone's functioning
It is necessary to note the limited period of special zone's functioning, and, therefore, the period of action of benefits. In the UK and Belgium, for example, the duration of special zones is limited to 10 years. In Spain, the term of operation of such zones is 3 years (with the possibility of continuing for another three years). In the US, in most states, the duration of special zones is 10-20 years.
In connection with the transition in the 1980s of the economically developed countries of the world from industrial to information economy, the processes of deindustrialization of the regions, where the old industry was deployed, rapidly losing its competitiveness in the global market, began to gain strength. The regions that lost the most were the leaders of the late nineteenth and early twentieth centuries. These are coal-metallurgical regions of the USA (Pennsylvania), Germany (Ruhr industrial district), Great Britain (Birmingham, Liverpool, Newcastle, Sheffield), France, Belgium, etc. In Japan, the last coal mine closed in January 2002.

For this reason, in recent decades many regional programs of industrialized countries are aimed at creating optimal conditions for the establishment and growth of knowledge-intensive industries in the regions.
This is the most effective option for economic development of the region, providing employment and raising the living standards of the population.
in the USA the states themselves develop and participate in various scientific and technical programs
It is necessary to note the limited period of special zone's functioning, and, therefore, the period of In particular, in the USA the states themselves develop and participate in various scientific and technical programs providing construction of factories, laboratories or service enterprises. These programs include tax incentives, financial assistance programs and targeted training of personnel.
In order to improve the conditions for innovation and technology upgrading, the following measures are taken in most developed countries:
  • creation of innovation centers and technology distribution agencies;
  • improving the infrastructural support of territories as a condition for the location of high-tech enterprises;
  • stimulating small high-tech firms, which are at the same time high-risk;
  • creation of a special fund to encourage innovation, etc.
Another area of modern regional innovation policy is participation in the creation of science and technology parks based on universities or research institutes. Such parks are designed to provide private firms with access to innovations developed with government support. Today there are about 400 science parks in the world.
Almost every region has a program of support and technical assistance to small businesses.

Local government takes over marketing research for small firms, training of personnel, organization of consultations. A significant part of small business focuses its activities on the innovation process.

According to the US National Science Foundation, small businesses produce 2.5 times more innovations per employee than large firms (in the US industry, small businesses account for 50% of large inventions). Small innovative enterprises in relative terms invest more in R&D than large ones. In addition, the final (implementation) process is on average one year faster at such enterprises.
Venture funds
Speaking about the financial mechanism of regional innovation policy abroad, it should be taken into account that in developed industrialized countries the law bans the use of budget funds of territories in the interests of private firms. Since the development of the latest technologies by private enterprises takes place on a commercial basis, the government has no right to directly finance this process from the budget. Non-profit venture organizations and funds are created for the purpose of innovation diffusion, through which the government promotes science and technology policy. At the same time, territorial governments grant innovative firms and funds the right to issue loans, shares for specific projects, lending to new companies, etc. Venture funds use grants from the central government, budgetary allocations of territories. They are allowed to issue bonds and even lotteries to finance innovations.

It should be noted that such a form of innovation activity as venture business has become popular in all developed countries of the world. At the end of the 90s the world market of venture capital reached over 100 billion dollars. It is this financial and economic mechanism that ensures intensive development of new knowledge-intensive industries, although in recent years there has been an increase in the share of venture capital financing in traditional industries and services.

Venture funds originated in the USA, where they currently manage financial resources estimated at 10 billion dollars. In Western Europe (UK, Netherlands, France), venture capital funds invest about 7 billion dollars per year in the economy, and along with national projects, large international projects in the field of high technologies are financed.
Cluster approach
It should be noted that in the world practice the development of industrial clusters is considered to be one of the factors in the formation of stable competitiveness of regions and entire states. Since the mid-1990s, studies focused on the analysis of competitiveness clusters have been widely discussed by the world scientific community. Cluster analysis methods are constantly improving and becoming rather popular.

Interesting, in particular, is the experience of Finland, where the cluster approach has become one of the basic analytical tools in analyzing the structure of the economy. Specialists of the Economic Research Institute of Finland, taking into account global economic processes, identified nine major clusters with obvious or potential competitiveness: forestry, information and telecommunications, metallurgy, energy, business services, health care, engineering, food, construction. For the purposes of industrial policy making, clusters have been classified according to their " degree of maturity" (strong, sustainable and potential).

Since the 1960s, the Finnish state has been actively developing a national innovation system. In 1967, the Finnish National Research and Development Fund was established, which pursued an independent policy of forecasting the country's technological growth and directly financing companies and their creative projects. In addition, twenty free public universities were opened in Finland in the 1970s, guided by the Science Policy Council established in 1963. In 1983, the National Technology Agency was established to fund research and development.
In the following years, public spending on R&D increased steadily, although other public expenditures were reduced.
Finland's industrial policy, one of the bases of which, along with the construction of a national innovation system, has taken into account the cluster nature of competitive industries, has given excellent results. According to a study by the World Economic Forum, in 2022, Finland will rank first in the ranking of prospective competitiveness and first in the ranking of current competitiveness of countries, having overtaken such leading industrialized countries as the USA, Japan and Great Britain.
Regional innovation policy
Regional innovation policy has important characteristics compared to the federal policy. In particular, one of the main tasks of regional innovation policy is to promote the development of small innovative business. The experience of the developed countries of the world shows that for the development of small innovative business on the local level the development of innovation infrastructure, which is a basic component of the innovative potential of the territory, is of great importance, rather than the provision of various kinds of tax benefits.

It is necessary to approach the management of innovation processes at the regional level from the position of strategic management. Attempts to solve operational tasks in the field of innovation are much less effective than the innovation strategy, which sets the goals of innovation activity, the choice of means to achieve them and the sources of attracting these funds.

The results of the implementation of innovation strategy of the region should be: a qualitatively new level of resource saving, growth of labor productivity, stock return, reduction of material intensity, energy intensity, capital intensity of products, achievement of its high competitiveness and, as a result, the transformation of the structure of the territorial economy in the direction of increasing the contribution of manufacturing industries.

State support of innovation activity at the regional level can be realized in the following forms:
- direct state stimulation of R&D by distributing budgetary and extra-budgetary financial resources (state orders, grants, crediting) between different spheres of R&D in accordance with the developed system of scientific priorities;
- indirect state stimulation of science and the assimilation of its achievements in the public and private sectors of the economy through tax, amortization, patent, customs policies, as well as by supporting small innovative enterprises;
- providing various types of preferences to the subjects of the innovation process (both directly to entrepreneurs who carry out innovations and to those elements of the infrastructure that provide them with some kind of support);
- formation of a favorable innovation climate in the regional economy and infrastructure for research and development (including services of scientific and technical information, patenting and licensing, standardization, certification, statistics, etc.).
Innovation marketing
Innovation marketing is a complex of measures to study questions related to the process of realization of innovative products, namely: the study of the consumer and the study of the motivations of his behavior in the market; the study of the innovative product and channels of its realization; the analysis of competitors and determination of the competitiveness of their innovative products; determination of the market, in which the enterprise has the best opportunities for the realization of its advantages.

Marketing evaluation of innovative activity is an important condition for the success of the activities organized in the region.

Thus, for the successful realization of innovation strategy in the region a whole complex of scientific, organizational and technical activities should be carried out:
- elaboration of the concept of development of innovation activity and innovation infrastructure with the definition of strategic goals and means of their achievement;
- elaboration of the program of innovative development of the region for the nearest future (in the form of a targeted document, indicating by resources, executors and terms a set of measures aimed at achieving the goals of innovative development of the region);
- inclusion of the main provisions of the innovative development program into the strategy of socio-economic development of the region;
- organization of practical activities of local government bodies on adoption and implementation of relevant normative and legal acts and implementation of organizational and informational measures to support innovation activity.
With the help of various elements of innovation infrastructure, the main tasks of innovation promotion are solved such as:
  • information support
  • production and technological support of innovation activity
  • certification and standardization of innovative products
  • promotion of effective developments and realization of innovative projects
  • organization of exhibitions of innovative projects and products
  • provision of consulting assistance
  • training, retraining and professional development of personnel for innovation activity and others
Key elements of innovation infrastructure:
    2. State scientific and technical policy of the Republic of Belarus
    Strategic goals of innovative development and ways to achieve them are set out in the State Program of Innovative Development of the Republic of Belarus for 2021-2025. The goal of the program is to achieve by the Republic of Belarus the level of innovative development of the leading countries in the Eastern Europe region on the basis of realization of the intellectual potential of the Belarusian nation.
    The main directions of the state innovation policy for 2021-2025:
    • 1) Formation of the best conditions in the region of Eastern Europe for realization and stimulation of scientific, technical and innovation activity on the basis of implementation of the best world practices:
      • concentration of state support on priority directions of scientific, scientific-technical and innovative activity for 2021-2025;
      • accelerated development of invention, rationalization and engineering creativity in the republic;
      • development of the national intellectual property system;
      • accelerated development of infrastructure in the spheres of scientific, scientific-technical and innovation activity;
      • formation of a comprehensive system of preferential regimes, tax incentives and financing mechanisms covering all stages of the innovation cycle;
      • increasing the role and prestige of the "creative class" (scientists, developers, inventors, innovators, entrepreneurs-innovators) as a key subject of innovative and socio-economic development of the country.
    • 2) Providing innovative development of traditional sectors of the national economy at the level of the European Union on the basis of increasing the knowledge intensive production:
      • formation of technological basis for innovative development of traditional sectors of the national economy on the basis of tasks of scientific and technical programs and innovation projects corresponding to high-tech production based on V and VI technological modes, including with the use of national developments;
      • digital transformation of traditional sectors of the national economy.
    • 3) Creation of new and faster development of existing knowledge-intensive and high-tech sectors of the economy:
      • organization of development and implementation of complex projects, primarily on the basis of commercialization of domestic developments;
      • development of innovative businesses in high-tech sectors;
      • balanced development of high-tech sectors in all regions of the Republic of Belarus.
    • 4) Expanding the representation and fixing the positions of the Republic of Belarus in the world markets of science-intensive and high-tech products:
      • development of jointly profitable international scientific-technical and innovation cooperation with attraction of world-class technologies and foreign investments in scientific, scientific-technical and innovation spheres into the economy of the country;
      • diversification of the geographical structure of exports of science-intensive and high-tech products.
    Task. How does the government implement policies to support innovation in your country? Write a short report about it in the document on the link.