This report examines the political, economic, demographic, and other factors that are brought to bear on Russia’s industrial and innovation policies. The analysis explores Russia’s strengths, weaknesses, opportunities, and threats to show that both governance
and socio-economic factors play an important role in determining how well a country is able to use its endowments to create a strong national innovation system. By most commonly accepted indicators, Russia is lacking in drivers for innovation, mechanisms
for innovation, and the framework conditions that can enable and foster innovation. Corruption and lack of transparency thwart the intent of government action, and an underdeveloped financial sector and limited access to capital hinders industrial innovation. The
role of governance and culture underlies both successes and failures in innovation policies. A slow but increasing influx of foreign direct investment in knowledge-intensive industries may help Russia capitalize on its scientific and technological and therefore
increase its capacity for innovation.