Knowledge absorption in an emerging economy – the role of foreign investments and trade flows in Russia

This paper studies the role of foreign investments and trade flows in knowledge absorption and innovativeness in Russia. Funding and human resources devoted to Research and Development (R&D) have been considerable in Russia, but so far, the innovation activity and R&D output has been modest. In order to achieve sustainable growth, Russia needs to change from a natural resource-based economy to a knowledge-oriented economy. Knowledge absorption from foreign investors in Russia is defined in a general level conceptually. Innovation indicators, such as domestic R&D expenditures and the level of higher education, are used to measure the overall absorptive capacity in Russia. It is assumed that Russia is, at the moment, more focused on imitating existing innovations than creating its own science-based innovations. The results of a statistical analysis indicate that the inflow of technology in the form of foreign investments and trade meet favourable technology/innovation absorption conditions in the Russian regions. Foreign investors are significant actors in the knowledge absorption framework.