Funding research and development in regions: tasks, current state, prospects

The task of developing an innovation economy is set before almost all countries, including the Russian Federation. The large-scale changes of recent times require a substantial revision of the established ideas about scientific and technological, and innovation activities, which is a multidimensional task. Here we present only some results of the study of current problems associated with the formation of regional funds to support research, scientific and technological activities. The problems of scientific and technological development in the aspect of technological modernization of the Russian economy are presented in the work “On the long-term scientific and technological development of Russia”1.

One of the key indicators characterizing the ability of organizations to implement innovations and their degree of involvement in it is innovation activity2. Over 10 years (from 2010 to 2020) the level of innovation activity of organizations in Russia increased slightly – by 1.3 percentage points, in 2020 it was 10.8%. According to data for 2020, the same indicator in Belgium and Germany was 67.8%, in the United States – 64.7%, in Sweden – 63.1%3. Statistical data indicate a significant lag of Russian organizations by the level of innovation activity from the world leaders (by 52.3–57.0 p.p.).

“At the same time the problem is exacerbated by imbalances in financing of the research and development sector in the RF regions. The difference between the leading regions and the outsider regions of Russia, as of 2019, is 140 times. In 58 of 79 constituent entities of the Russian Federation (73.4%) the proportion of domestic spending on research and development in GRP is less than 1% and only in 8.9% of the constituent entities

Figure 1. Share of spending on research and development in international comparison, 2020, %

Source: Organization for Economic Cooperation and Development (OECD) statistical database. Main science and technology indicators. Available at:

spend for these purposes more than 2% of GRP” (Klimova, 2021).

In addition, according to the Ministry of Finance of the Russian Federation, in 2021 budget financing of research and development amounted to 635 billion rubles, and in 2022 it was planned only 586 billion rubles, which is 7.7% less than the previous year4.

Inadequate funding of innovation activity leads to the low return on science and research. In this regard, the problem of financial support for the research and development sector is urgent. At the previous stages of the study, we found that “one of the effective and legitimate methods of enhancing the financing of science in the regions of Russia can be the creation of regional funds to support research, scientific, technological, and innovation activities” (Mazilov, Ushakova, 2019). According to the federal law “On science and state scientific and technological policy” these funds are understood as “organizations which are created by the Russian Federation, constituent entities of the Russian Federation, physical and (or) legal entities for the purpose of financial support of research, scientific and technological, and innovation activity including on conditions of co-financing at the expense of various sources not prohibited by the legislation of the Russian Federation”8.

The purpose of the study is to examine the organizational conditions for the formation of funds to support research, scientific and technological, and innovation activity. The main objectives of the work are: 1) to determine the sources of budgeting of the funds in question; 2) to propose directions for using the money accumulated in the funds; 3) to review and adjust the existing areas of incentives for companies to participate in the financing program of the funds.

Theoretical aspects of research

In general, the problems associated with the financing of science and innovation are raised in the works of both Russian (Aganbegyan, 2015; Ivanchenko, Gorbunov, 2018; Mindeli, Chernykh, 2017; Osovin, 2020 et al.) and foreign (Paunov, Borowiecki, 2018; Larrue et al., 2018; Jesemann, 2020; Kimberly, 1979; Schumpeter, 1954 et al.) researchers. A number of works emphasize the importance of financial support for innovation, science and other activities. For example, according to the author (Aganbegyan, 2015), funding plays a significant role in the development of science, education, information technology, etc. From the point of view of the authors of the study (Ivanchenko, Gorbunov, 2018), financial resources are an important condition for innovative development and implementation of innovation, as well as the implementation of innovative directions.

Some works specify the role of financial support, for example, emphasize the importance of funding in supporting basic research and development (Ivanchenko, Gorbunov, 2017). M.N. Osovin calls R&D funding a central element in the creation of future breakthrough technologies (Osovin, 2020). A similar point of view is indicated in the works (Larrue et al., 2018;

However, it should be noted that in Russia the main source of funding for science and innovation is the state budget. This fact is confirmed by statistical data. In the structure of domestic expenditure on research and development by source of funding as of 2020, the share of funds allocated to R&D in Russia by the state is 67.8%, and by the entrepreneurial sector – 29.2%. However, among the world leaders, highlighted by the level of innovation activity, there is an opposite situation. For example, in Germany the share of funding from the business sector accounts for 64.5%, government funding – 27.8%, in Belgium – 64.3 and 17.8%, in the United States – 63.3 and 22.1%, Sweden – 60.8 and 25.0%, respectively (Fig. 2) .

The current situation shows that in foreign countries the main source of funding in the structure of domestic R&D expenditures is the funds of the entrepreneurial sector. This fact is due to the developed system of interaction between science and business, when the private sector is interested in expanding and accumulating scientific knowledge in order to increase the competitiveness of manufactured products (Bekkers, Bodas Freitas, 2008; Perkmann, Walsh, 2007). However, in Russia

Figure 2. Structure of domestic spending on research and development by source of funding in international comparison, 2020, %

□ Government funding         □ Business sector funding

Note: Ranked in descending order by the “public funds” column.

The results of the scientific literature analysis have shown that there is no unified opinion on the efficiency of the Russian model of R&D financial support, characterized by the dominant role of the state;

Thus, it should be emphasized that in Russia the system of financial support of R&D is characterized by a high share of state participation, but the level of innovation activity in the country remains low. At the same time in foreign countries, where the funds of the entrepreneurial sector play a dominant role in the financing of science, there is a high level of innovative development. As one of the tools that contribute to changing the current situation in Russia, the funds to support research, scientific and technological, and innovation activities can act, contributing to the implementation of innovation policy, increasing domestic spending on R&D (Chernova, Mikhailova, 2019). According to A.A. Gretchenko, the funds to support research, scientific and technological, and innovation activities by financing R&D contribute to the implementation of various scientific and technological projects (Gretchenko, 2007). Specialists of the Higher School of Economics emphasize that these funds can act as a tool for accumulating funds for long-term scientific projects15. The need for their formation is also justified in other works (Lapochkina et al., 2018; Chernykh, Bukina, 2013). T.N. Topoleva notes that the activity of the funds contributes to the implementation of measures aimed at stimulating and improving the efficiency of the research and innovation sector at the regional level (Topoleva, 2021). The role of these funds in the creation and development of the national innovation system is discussed in (Kookueva, 2021).

Despite the presence of numerous studies related to the issues of financial support of innovation activities, the publications on the topic of funds are few, there is practically no comprehensive study. Questions concerning the financial content of the funds’ budget and the areas of expenditure of the accumulated funds remain unexplored. In addition, there are no studies that raise the problems of stimulating companies to participate in the financing of funds to support research, scientific and technological, and innovation activities, which determines the scientific and practical relevance of the work.

A number of foreign countries also have such funds (Germany, USA, Sweden, etc.). The analysis of global experience revealed that in innovatively developed countries the burden of R&D financing is distributed between the state and business. For example, in countries with a high share of participation of the entrepreneurial sector in the financial support of the research and development sector (Germany, USA, Sweden) the source of financing of funds in most cases is the state (Tab. 1) . In Russia, on the other hand, state financing prevails both in the R&D sphere as a whole and in the formation of the funds’ budgets. Taking into account foreign experience, financial support of

Table 1. Foreign experience of replenishing the budgets of funds to support research, scientific and technological, and innovation activity

Country Funds to support research, scientific and technological, and innovation activity Source of replenishing the fund’s budget Germany The German Federal Environmental Foundation Federal budget USA The National Science Foundation (NSF) of the USA Federal budget Sweden Sweden’s Innovation Agency (Vinnova) Federal budget Republic of Kazakhstan The National Fund of the Republic of Kazakhstan Entrepreneurial sector Republic of Uzbekistan Foundation for Scientific and Innovation Development Entrepreneurial sector Fund to support innovation activities of large state-owned enterprises and economic management bodies Entrepreneurial sector Source: The German Federal Environmental Foundation. Available at: ; The National Science Foundation. Available at: ; The Science and Innovation Development Fund was established in Uzbekistan. Available at:

dated August 23, 1996, in the amount not exceeding 1,5% of revenues from sales of products”16. Paragraph 1 of Article 15.1 of the federal law “On science and state scientific and technological policy” states that “funds may be created by the Russian Federation, the constituent entities of the Russian Federation, physical persons and (or) legal entities in the organizational-legal form of a fund”17.

Methods and information base of the study

To implement the goal and objectives used a system-wide approach, which involves a comprehensive study, focusing on the reproduction of funds to support research, scientific and technology and innovation activities from the perspective of not only their formation, but also the use of attracted funds.

Research findings

We emphasize that the option of contributions to the funds budget by all companies is ideal. To participate in the proposed model in practice, it becomes important to take into account the financial capabilities of enterprises to resourcing the research and development sector. The budget

Indicator	Year					Share of costs including revenue			Increase in the case of deductions of 1.5%
	2008	2012	2016	2018	2019	+0,5%	+1,0%	+1,5%
Actual share of domestic spending on research and development in GDP, %	1.27	1.31	1.33	1.37	1.20	2.06	2.91	3.74	2.54
Expenditures on research and development in the Russian Federation, thousand rubles per capita, in current prices	3.0	4.6	6.0	7.0	7.7	13.4	19.1	24.8	17.1

Source: compiled according to Russian regions. Socio-economic Indicators: Stat. coll. Available at: document/13204

Table 3. Calculations to replenish the budget of funds subject to the participation of organizations included in the Expert-400 list (as of 2019, in parentheses – 2018)

Federal district	0.5% of revenue	1.0% of revenue	1.5% of revenue
	costs for R&D + 0.5% of revenues, rubles/person	costs for R&D + 0.5% of revenues, rubles/person	costs for R&D + 0.5% of revenues, rubles/person
Central Federal District	14 564.1 (13 782.1)	24 112.3 (22 989.3)	33 660.6 (32 196.5)
Northwestern Federal District	6 178.3 (5 760.2)	7 721.5 (7 344.5)	9 264.7 (8 928.7)
Southern Federal District	2 233.0 (1 931.1)	3 056.8 (2 757.9)	3 880.5 (3 584.7)
Volga Federal District	5 729.0 (5 166.6)	6 386.1 (5 804.1)	7 043.3 (6 441.6)
Ural Federal District	5 860.8 (5 726.9)	8 259.0 (8 010.3)	10 657.3 (10 293.7)
Siberian Federal District	5 279.7 (4 710.1)	6 268.3 (5 479.3)	7 256.8 (6 248.4)
Far Eastern Federal District	3 198.7 (3 479.7)	3 846.4 (4 361.3)	4 494.1 (5 242.8)

Note: The regions of the North Caucasian Federal District were not included in the top 400.

Source: compiled according to the rating of the largest companies in Russia. Available at:

The analysis conducted using Expert-400 data for 2019 has led to the conclusion that in the case of deductions from the revenues of the analyzed companies in the amount of up to 1.5%, the volume of R&D costs in Russia will increase up to 2.3 times. The greatest changes in the values of the index are observed in the Siberian (16.1%), as well as in the Central (6.7 times; Tab. 3 ) federal districts (Klimova, 2021).

In the context of the reproduction of the funds’ activity, an important issue is not only the formation of their budget, but also its use. In this connection, a problem was solved concerning the determination of directions for spending the funds accumulated at the expense of deductions from the revenues of companies in the funds to support research, scientific and technological, and innovation activity.

Certain areas of funding for the scientific sphere are enshrined in normative legal acts, in particular in the passport of the national project “Science”. In the report on the interim results of monitoring the implementation of measures within the framework of the national project “Science” indicated that “the participation of the constituent entities of the Russian Federation in it is not provided, despite the receipt of proposals from 53 regions”19. At the same time, in some constituent entities the project is still being implemented, which is confirmed by the publication of its regional passports on the official portals of the governments of the constituent entities of the Russian Federation (Republic of Altai, Republic of Ingushetia, Chelyabinsk and Tula oblasts). Nevertheless, the data presented show the predominant role of federal financial support for the development of science (Tab. 4).

Table 4. Financial support for the implementation of the national project “Science”, million rubles

Source	Amount of financial support by years of implementation							Total, 2019–2024
	2018	2019	2020	2021	2022	2023	2024
Total for the national project at the expense of all sources, including:	0.0	49 747.6	62 087.9	76 517.3	111 046.3	148 080.5	188 480.4	635 959.9
federal budget	0.0	36 992.2	42 965.8	55 111	80 404.9	97 904.9	91 408.9	404 787.6
budgets of state extrabudgetary funds of the Russian Federation	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
consolidated budgets of the constituent entities of the Russian Federation	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
extrabudgetary sources	0.0	12 755.4	19 122.1	21 406.2	30 641.5	50 175.6	97 071.5	231 172.0

Note: In the passport of the national project “Science”, the values of the amount of funding are specified for the project as a whole.

Source: Passport of the national project “Science”. Available at:

Table 5. Research and development costs including contributions to funds 0.5% of company revenues, 2019, billion rubles

Chelyabinsk and Tula oblasts) amounted to 29.9 billion rubles for 2019. At the same time, subject to deductions of 0.5% of companies’ revenues in the constituent entities under consideration, the additional volume of financing of the research and development sector in 2019 could amount to 17.1 billion rubles (Tab. 5) .

Earlier calculations have shown that in the case of 0.5% deductions from companies’ revenues, an additional 6,636.1 million rubles could be received in the Vologda Oblast and 76,102.7 million rubles in the Moscow Oblast (Gulin et al., 2019). Let us assume that the funds received will be allocated to the above-mentioned areas in accordance with the existing structure of their distribution. Thus, in the Vologda Oblast, 0.1% of the generated funds will be used to finance the contest of scientific grants for business, in the Moscow Oblast – 0.8%, for budget programs – 1.8% and 12.2%, for financing regional research projects – 0.8% and 7.7%, for state orders – 97.4% and 79.2% respectively.

Funding for research grant competitions for business in the Vologda Oblast as of 2019 amounted to 1 million rubles, in the Moscow Oblast – 40 million rubles21. Contributions of 0.5% of companies’ revenues (according to 2019 data) can

Table 6. Directions for the use of financial resources accumulated in the regional funds to support research, scientific and technological, and innovation activities, million rubles

Direction Actual values, 2019 Values including 0.5% of companies’ revenues Vologda Oblast % Moscow Oblast % Vologda Oblast % Moscow Oblast % Science grant competitions for businesses 1.0 0.1 40.0 0.8 4.9 0.1 614.5 0.8 Budget programs 23.4 1.8 606.8 12.2 116.7 1.8 9 320.9 12.2 Government orders 1 296.0 97.4 3 924.9 79.2 6 464.5 97.4 60 291.6 79.2 Funding of regional research projects 10.0 0.8 382.5 7.7 49.9 0.8 5 875.7 7.7 Total 1 330.4 100 4 954.2 100 636.0 100 76 102.7 100 Source: Announcement of state scientific grants of the Vologda Oblast based on the results of the competition held in 2019. Available at: ; Companies from near Moscow will receive grants in the amount of 50 million rubles for scientific developments. Available at: ; Consolidated budgets of constituent entities of the Russian Federation and budgets of territorial state extrabudgetary funds. Available at: ; Look what the cat dragged in: The state order cannot become a guarantor of industry stability. Available at: https://www. ; SBIS. Available at: ; Russian Science Foundation. Available at: https://xn--m1afn. xn--p1ai/project/

contribute to an increase in the amount of money coming to this direction in the Vologda Oblast, almost 5 times, in the Moscow Oblast – 15 times (Tab. 6).

Analysis was conducted in relation to government orders using the data of the largest companies in the regions: in the Vologda Oblast – “Severstal”, in the Moscow Oblast – “Zagorsk Pipe Plant”, which is included in the Expert-400 rating of large Russian companies. Financing of state orders at the expense of contributions of companies may be increased in the Vologda Oblast from 1 296 to 6 464.5 million rubles, in the Moscow Oblast – from 3 924.9 to 60 291.6 million rubles23.

The analysis of the amount of funding for regional research projects was carried out on the basis of the RSF data24. In 2019, 10 million rubles were allocated in the Vologda Oblast and 382.5 million rubles in the Moscow Oblast. Participation of companies in replenishment of the funds’ budget will allow to increase financing of regional research projects 5-fold and 15.3-fold, respectively.

The possibility for companies to make contributions to the budget of funds to support scientific, scientific and technological and innovation activity in the amount of up to 1.5% of their revenues actualizes the issue of interest of organizations to participate in this funding program. In this regard, it is advisable to consider the directions of stimulating organizations to participate in the formation of the budget of these funds.

Among the indirect measures of stimulation the most widespread are tax privileges. According to Article 286.1 of the Tax Code there is “an investment tax deduction amounting in the aggregate to no more than 90% of the amount of

Along with this, it seems expedient to include in the Tax Code a provision on the approach in which it is supposed to reduce the profit tax of an organization while increasing its expenses in the form of deductions to the budget of funds, as well as increasing the tax benefits provided to it with regard to, for example, “exemption from customs duties, tariffs, VAT on purchased equipment, devices, raw materials, materials, intellectual property necessary for implementation of radical innovative projects” (Todosiichuk, 2012).

We should note that the very possibility of formation of funds to support research, scientific and technological, and innovation activity is regulated in the federal law “On science and state scientific and technological policy”. This document has information on the legal status of funds, as well as on the directions of their activities28, but the law does not present provisions on the incentives for the creation of such funds. From our point of view, it is necessary to include in this document proposals for the provision of various benefits and preferences, such as the provision of budget investment, state guarantees, preferences in public procurement, information support, etc.

It is important to emphasize that at the regional level there are laws and regulations focused on scientific and technological development, based on the federal legislation. Accordingly, they contain provisions for the formation of funds to support research, scientific and technological, and innovation activities. It seems necessary to include in regional laws and regulations the information that public authorities of constituent entities of the Russian Federation may grant preferences to organizations that take part in replenishing the budget of the funds in question.

Conclusion

The work is a comprehensive study, which focuses not only on the role of funds to support research, scientific and technological, and innovation activities in enhancing innovation activity, but also on the study of organizational and legal conditions of their creation, opportunities to replenish the budget of funds, directions of spending funds, etc., which determines the theoretical significance of the article. The practical significance lies in the fact that the results of the study can serve as an economic justification and organizational support for the creation of regional funds by the authorities at the level of the constituent entities of the Russian Federation. In addition, the results of the analysis of existing modern practices can be used for the development of a separate federal law regulating the creation and functioning of the funds in question.