government R&D may be both too large and too fragmented; with many institutions performing little if any research and others conducting research that does not need to be in the public sector.

Though universities are at the core of Russia’s current policies for commercializing publicly funded research, higher education institutions only conduct 6 percent of total R&D. This ratio is well below that in other advanced economies. As a share of GDP higher education institutions represent 0.07 percent in Russia, against an average for OECD countries of 0.39 percent, over five times as high. Moreover, as of 2008 only a third of universities conducted R&D, down from 52 percent in 1996. Historically, research has been mostly in the hands of the research institutes affiliated with the RAS, with universities having teaching as their main mandate (UNESCO 2010).

**Table 3: R&D by funding source and performer, 2007**

|**R**|**&D funding sour**|**ce**|||**R&D performer**|||
|---|---|---|---|---|---|---|---|
||**Rb**|**US$**|||**Rb**|**US$**||
|**SECTOR**|**u**<br>**(million)**|<br>**(million)**|**%**|**SECTOR**|**u**<br>**(million)**|<br>**(million)**|**%**|
|State|232,365|9,294.6|63|State|107,985|4,319.4|29|
|Business sector|109,265|4,370.6|29|Business sector|238,386|9,535.4|64|
|Foreign sources|26,796|1,071.8|07|||||
|Other sources|2,654|106.2|01|||||
|||||Higher education|23,472|938.9|06|
|||||Non-profit orgs.|1,237|49.5|003|
|**Total**||**14,843.2**||**Total**||**14,843.2**|**100**|

Source: Indicators of Science – MoES, Higher School of Economics, 2009.

The institutional structure of the Russian innovation system carries a heavy legacy from Soviet times. Public research organizations, led by research institutes affiliated with the RAS, receive a high proportion of public resources devoted to R&D. The RAS has generally received around 40 percent of government funding to science<sup>5</sup> (Gianella and Thompson, 2007), which it allocates among its 468 institutes (with 76 percent going to natural sciences in 2009). The Russian Academy of Medical Sciences received another 6 percent for 69 institutions. All these research institutes are counted as part of the business sector (Table 4). Higher education institutions (621 of them) received 6.6 percent of government funding.

**Table 4: Number of institutions,** **<u>personnel by performin</u>** **<u><mark>g</mark></u> sector**

||**Number**<br>|**of organi**<br>|**zations**<br>|**Number**<br>|**of R&D per**<br>**headcount**<br>|**sonnel,**<br>|**% in in**<br>**ex**<br>|**tramura**<br>**penditur**<br>|**l R&D**<br>**e**<br>|
|---|---|---|---|---|---|---|---|---|---|
||**2006**|**2007**|**2008***|**2006**|**2007**|**2008***|**2006**|**2007**|**2008***|
|**Government sector**|1,341|1,483|1,480|274,802|272,255|274,515|27|29.2|29.8|
|**Business sector**|1,682|1,742|1,663|486,613|478,401|467,144|66.6|64.2|63.2|
|**Higher education**|540|616|621|44,473|49,059|49,363|6.1|6.3|6.6|
|**Private non-profit**<br>**sector**|59|116|138|1,178|1,420|1,741|0.3|0.3|0.4|
|**Total**|3,622|3,957|3,902|807,066|801,135|792,763|100.0|100.0|100.0|

Source: Indicators of Science – MoES, Higher School of Economics, 2009. *=Estimated

> 5 The RAS performs for two thirds of basic research (New York Academy of Sciences,  2010)

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