Download Innovations in Russia

Innovations in Russia:
Lessons from the Crisis
and Strategic Policymaking
Center for Macroeconomic Research
Sberbank
March, 2010
1
Has crisis affected innovations in Russia? – The
short answer is “NO”: If something does not exists,
nothing can affect it.
Pre-crisis situation according to the HSE 2009 enterprise survey:
• Only 25% of firms self estimate their technological level as
equivalent to the level of their foreign competitors.
• Share of firms, doing R&D, decreased from 37% in 2004 to 29% in
2008. However, R&D spendings, conditioning on doing R&D,
increased. .
• Share of firms, having training programs for employees decreased
from 69% in 2004 to 50% in 2008. Only in 25% of firms training
programs cover more than 10% of personnel.
2
Presence of foreign companies remains the
major factor of innovations
Some gov-t
ownership,
11%
Some foreign
ownership,
10%
No foreign
ownership,
90%
No gov-t
ownership,
89%
Share of firms, %:
0
10
20
30
40
50
0
10
20
30
40
50
60
Actively innovating
Introducing new products
Introducing new technology
Undertaking big
investment programs
no government ownership
some government ownership
no foreign ownership
some foreign ownership
3
What about startups?
•
Prior to the crisis a number of “development institutions” was
established by the government to support innovations:
–
–
–
Rusnano (support of business and infrastructure development in
nanotechnologies). Government support initially was equal to 130 bn rubles ($4.4
bn), but in 2009 it was cut in half until 2011. At the moment Rusnano invested at
about 38 projects; total investments in the projects equal to 96 bn. Rubles, Rusnano
investments 51,8 bn.Rubles.
Russian venture company (support of venture funds and infrostructure building).
Initial government support 30 bn.Rubles. At the moment 7 venture funds were
supported with overall capital of 19 bn.Rubles. As of November 2009 only 18% of
capital was invested.
Small business in sience and technology support fund. Total budget in 20092010 is 4.8 bn. Rubles. Normally finances 800 projects per year. Results by now:
•
•
•
–
•
More than 2000 innovation companies
More than 15 000. job
3 000 young researchers supported by the government
Technology commercialization SEZ. Currently 4 SEZ exists:162 projects with
overall costs of 121.5 bn. Roubles.
Effect of the crisis: financing was reduced, but it has never been
and has not became a binding factor.
4
Government investment
Private financing
Businessangels
Support programs for
medium and small
businesses
Lack of private
financing of R&D
Regional
venture funds
Venture funds
with “RBC” and
“Rosnano”
participation
Vneshekonombank
Federal program
«Research &
development…»
Federal program
«Nanoindustry
infrastructure development
in Russia»
Fundamental science
research,
national academies
of science
Idea
Problem of
converting an
idea into
commercial
prototype
Federal program
«National technology
base»
«Rosnanotech»
RBC Seed
fund
Investment Fund
Fund for
Support small
business forms
Prototype
New product
introduction
Mass
5
production
I.
Development and lessons from the crisis:
timing and transmission channels
2007 - Aug 2008
Sept 2008 Mar 2009
April 2009 – …
• Credit boom
• High capital
outflow
• Green shoots and stabilization of
the world economy
• Lack of proper risk management
• Financial crisis
• Commodity prices bounced back
• Insufficient prudential regulation
• Credit crunch
• => Stabilization in Russia
• High volatility
• Devaluation
• High level of mistrust
• NPL crisis in
banking sector
• CBR got opportunity to cut
interest rates
• High oil prices
Crisis transmitted to the Russian economy through the following channels: 1) sharp capital
outflow 2) collapse of commodity prices 3) “sudden stop” in world credit markets. (see the next
slide)
Because of distrust into national currency CBR was unable to provide loose monetary policy
from the very beginning. Only in Q2 2009 it began to cut interest rate. Future economic
situation largely depends on developments in the world economy.
6
I.
Development and lessons of crisis:
main indicators
Commodity markets
Stock markets
$ price index, max = 100
100
Jan 08 = 100
100
80
60
80
60
Oil
Copper
40
40
Aluminium
Nickel
MICEX
20
Steel
20
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Foreign currency exchange
12
0
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Capital inflows
54.3
$ bln a month
16
14
S&P500
Gold
13.8
Population buying FX
Population selling FX
$ bln.
40.7
21.5
11.6
4.5
-7.2
-19.3
-23.7
10
-33.4
-35.1
8
6
4
-130.5
2
Jan 07
I
Oct 08
Aug 09
II
III
2007
IV
I
II
III
2008
IV
I
II
III
2009
7
IV
I.
Development and lessons of crisis:
lessons
Russia was among the countries most severely hit by the crisis
Lessons Russia has to learn
Macroeconomic policy
Banking sector regulation
In 1999-2008 Russian policy aimed at
sustaining growth through ER
management, but it missed to stabilize
inflation expectations. Massive capital
outflows at the beginning of the crisis
provoked run from the national currency.
As a result Government and Central Bank
were unable to weaken policy to the
extend sufficient for support of the
economy.
Due to lack of restructuring banking sector
remained weak and segmented before the
crisis. In addition Russia experienced
classic credit boom. As crisis unfolded this
resulted in high NPL level and poor banks’
balances. To avoid future crises reforms in
financial sector are necessary, including
prudential regulation in accordance with
G20 recommendations, and banking
sector consolidation.
8
REAL ECONOMY:
Recovery started, but not stable yet
GDP
Industry
Source: Rosstat, CMR calculations
Q1 2002 =100
180
Jan 07 =100,
seasonally adjusted
Source: Rosstat, CMR calculations
130
120
160
110
140
100
120
Industrial production
Fixed capital investment
Construction
Transport turnover
90
GDP, real NSA
100
GDP, real SA
80
2005 2006
2007 2008
2009
GDP components
55
10
Government
expenditures
50
0
45
-10
40
-20
QI
QII
QIII
QIV
-30
Source: Haver Analytics, IET
30
3rd and 4th quarters of 2009 see increasing positive input into GDP from
export and inventories cycle.
Mar10
-15
GDP growth
% YoY
35
Jan 10
Inventories
adjustment
Nov 09
-10
Sep 09
-10.8
Jul 09
-9.4
May 09
Capital
investment
Mar 09
-7.7
20
Jan 09
-5
60
Net export
Nov 08
-3.8
IET Industrial Sentiment
Sep 08
0
PMI
Household
consumption
Jul 08
Source: Rosstat, CMR calculations
May 08
5
Indices
Mar 08
2003 2004
Jan 08
2002
80
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
07 07 07 07 08 08 08 08 09 09 09 09 10
9
-40
REAL ECONOMY:
Regional perspective
Industrial production in Nov 09 – Jan 10, monthly average
130
Source: Rosstat, CMR calculations
• Large group of
regions reached precrisis level of output
already
Sakhalin
Amurksaya
120
Kalmykiya
V
110
Magadan
Bashkortostan
Kursk
Sakha
Stavropol
Murmansk
Moscow oblast
N.Novgorod
100
Karach-Cherkessia
Kaliningrad
Lipetsk
Mordovia
Tula
Tatarstan
Yamal
90 Ulyanovsk
Vologda
Kemerovo
Omsk
Sverdlovsk
Perm
Astrakhan
Belgorod
Buryat
Komi
Khakassia
HM AO
Tyumen
Udmurt Rep Tambov
Tomsk
Novosibirsk
Leningrad oblast
Penza
Kostroma
Kaluga
Ростов
Yaroslavl
Novgorod
Kirov
Khabarovsk.
Moscow city
Ryazan
Ivanovo
Chelyabinsk
Vladimir
Chechnya
80
L
Tver
Orel
60
60
70
index,
average monthly
industrial production
in H1 2008 = 100
Kurgan
Bryansk
80
L-recession
• Orel, Samara, Tver,
Bryansk, Kurgan,
Chuvashia, Ivanovo,
Vladimir
seasonally adjusted,
Samara
Chuvashia
70
V-recovery
• N.Novgorod, Kursk,
Moscow oblast, Tula,
Kaliningrad, Lipetsk
Arkhangelsk
90
100
110
120
Industrial production index in H1 2009, monthly average
130
10
DRIVERS OF GROWTH:
Oil and gas markets
Oil prices
Natural gas
Source: Reuters
URALS $/barrel
140
500
120
USD/th. m3
400
100
300
80
Gazprom
contracts
EU spot
market (TTF)
200
60
100
40
Jan 10
Oct 09
China imports
Supply and demand on oil market
Source: Energy Information Group estimates
mln. barrel a day
Jul 09
Apr
10
Apr 09
Jan
10
Jan 09
Oct
09
Oct 08
Jul
09
Jul 08
Apr
09
Apr 08
Jan
09
Jan 08
Oct
08
Oct 07
Jul
08
Jul 07
Apr
08
Apr 07
0
Jan 07
20
Jan
08
Source: Bloomberg
500
Oil
Iron ore
Copper
Aluminium
400
86
300
200
World supply
world demand
100
High demand from China and discipline in OPEK permitted quick recovery in
energy and raw materials demand. Natural gas sector, where market goes
through structural changes, is an exception.
Jan 10
Oct 09
Jul 09
Apr 09
Jan 09
Oct 08
Jul 08
Apr 08
Jan 08
% from average monthly imports in 2007, in real terms
Oct 07
Jan 10
Oct 09
Jul 09
Apr 09
Jan 09
Oct 08
Jul 08
Apr 08
Jan 08
Oct 07
Jul 07
Apr 07
Jan 07
0
Apr 07
82
Jan 07
84
Jul 07
88
Source: Bloomberg, IMF
600
11
DRIVERS OF GROWTH :
Metal markets
Nickel
Price, USD/ton
Steel (mediterranean)
Price, USD/ton
LME stocks, th. ton
100
Mar 10
Jan 10
Nov 09
Sep 09
Jul 09
May 09
Mar 09
Jan 09
Nov 08
Sep 08
Jul 08
May 08
0
Mar 08
0
30
600
20
400
10
200
0
0
Feb 10
3000
800
Oct 09
200
40
Aug 09
300
1000
Jun 09
6000
50
Apr 09
400
1200
Feb 09
500
Price, USD/ton
60
Dec 08
9000
Oct 08
600
Aug 08
LME stocks, th. ton
Dec 09
Copper
Jan 08
0
Jan 08
Mar 10
Jan 10
Nov 09
Sep 09
Jul 09
May 09
Mar 09
Jan 09
0
Nov 08
Sep 08
Jul 08
May 08
Mar 08
Jan 08
0
5000
Mar 10
500
Source: Bloomberg
10000
Jan 10
1000
15000
Sep09
1000
20000
Jul 09
2000
1500
25000
May 09
2000
Mar 09
3000
30000
Jan 09
2500
35000
Nov 08
4000
Price, USD/ton
180
160
140
120
100
80
60
40
20
0
Sep 08
3000
Jul 08
3500
May 08
5000
LME stocks, th. tons
Mar 08
LME stocks, th. tons
Nov 09
Aluminium
12
DRIVERS OF GROWTH :
Stock markets
Stock indices
Stocks in oil and gas sector
Source: Bloomberg, Reuters
Jan 08 = 100
100
Jan 08 = 100
100
80
80
60
60
40
40
MICEX
MICEX
20
20
S&P500
0
Jan
08
Apr
08
Jul
08
Oil&Gas
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
0
Jan
08
Jan Apr
10 10
Stocks in manufacturing sector
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Jan 08 = 100
80
80
60
60
40
40
MICEX
20
Manufacturing
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Apr
10
Jan 08 = 100
100
0
Jan
08
Jan
10
Stocks in financial sector
100
20
Oct
09
Oct
09
Jan
10
Apr
10
0
Jan
08
MICEX
Financials
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Excess liquidity on global financial markets leads to a rally on world and
Russian stock markets. Energy out-, while manufacturing under-performs.
Oct
09
Jan
10
Apr
10
13
DRIVERS OF GROWTH:
Bond markets
Corporate bonds market
Eurobonds
Source: CBonds
250
New issues
Market volume
150
80
60
4
3
Mar 10
Jan 10
Nov 09
0
Sep 09
0
Jul 09
0
May 09
1
Mar 09
20
Jan 09
50
Nov 08
2
Sep 08
40
Jul 08
100
Mar 10
Jan 10
Nov 09
Sep 09
Jul 09
May 09
Mar 09
Jan 09
Nov 08
Sep 08
Jul 08
May 08
Mar 08
Jan 08
0
6
5
New issues (rs)
Sovereign
Corporate
Jan 08
bln. rubles
500
Russian companies’ IPO in 2009-10
Loan rates and bond yield
25
bln. USD
100
200
1500
1000
Source: CBonds
May 08
2000
120
Mar 08
2500
• Not a single IPO in 2009
Source: Cbonds, CBR
20
• SPO in 2009 attracted $1,15 bln.
15
• VTB equity offering bought out by the gov-t
10
• Jan 2010: RUSAL IPO gets $2,2 bln.
• Many IPO are planned for 2010
Effective bond yield
Loan average rate
5
Mar 10
Jan 10
Nov 09
Sep 09
Jul 09
May 09
Mar 09
Jan 09
Nov 08
Sep 08
Jul 08
May 08
Mar 08
Jan 08
0
(SUEK, Protek, MetalloInvest, Russkoe
more, Rusagro, Kuzbass fuel company,
EMAlians, Uralchem)
Corporate bond market boom and IPO perspectives enhance financial
situation for large Russian companies. Medium and small businesses are in
a more difficult situation
14
CHALLENGES AND RISKS:
Financial sector
Credit to real sector
Payments overdue
% from total payments
7.3
nominal index, Jan 08 =100
Source: CBR
8
150
Individuals
140
6
Businesses
6.2
130
4
120
Businesses
110
2
Individuals
100
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar
08 08 08 08 08 08 09 09 09 09 09 09 10 10
Credit and deposit rates
0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar
08 08 08 08 08 08 09 09 09 09 09 09 10 10
Reserves and bad loans
Lending rate
Deposit rate (w/o demand deposits)
% from total loans
10
18
16
12.7
14
8
6
12
8.4
10
8
6
Jan
08
Reserves
Problematic and hopeless loans
Apr
08
Jul
08
Oct
08
Jan
09
Apr
09
Jul
09
Oct
09
Jan
10
4
2
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar
08 08 08 08 08 08 09 09 09 09 09 09 10 10
15
Survey data: credit availability and usage or
credit
Companies’
loan
Size ofsize,
enterprises,
loan rejections
rejections and loanand
arrearsarrears
Sources of companies’
financing
Sources of enerprises'
financing
Рисунок 3 Цухло
Eurobonds
100
Syndicated loans
90
Bonds
80
70
Foreign banks' loans
%
Others
60
50
40
Budget financing
30
Shareholders' capital
20
Leasing
10
Domestic banks' loans
0
<100
Retained earnings
101-250
251-500
501-1000
1001-2000 2001-5000
>5000
Number of employees
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Companies, whose loan applications were approved
Companies without loan arrears
•
According to HSE survey: prior to crises competitive firms financed
most of their investments from retained earnings. Leverage was larger
in non-competitive firms.
•
Sberbank survey: only 10 % apply for credit because of needs to
finance investment projects
•
Sberbank survey: because of crisis 63-93% of firma cut down their
investment plans.
16
Effect of the crisis on different industries:
Food industry
Oil, coal and nuclear products
Chemicals
Machinery & equipment
Source: Center for Macroeconomic analysis and Short-Term forecasting
17
Some lessons from the crisis:
• Natural resource dependence was positive factor
which speeded up initial stage of recovery.
• Noncompetitiveness of cyclical sectors slows
recovery down.
Crisis have shown that technological modernization is
important not only for long-term development but
also for more balanced growth.
18
Current policies in innovation sphere
• Rusnano and RVC are getting more active in
creating innovations ecosystem
• Techno park in Skolkovo
• President committee on modernization of economy
• The fact that budget switched from 6% surplus o
6.5% deficit has not affected government desire to
create innovation-driven economy
Limiting factors:
• entrepreneurships and management skills
• IPR and general business climate
19