Science and innovation in times of crisis: To be or not to be?

Andrei Laurukhin


The year 2015 was the time to sum up the results of the State Program of Innovative Development of Belarus (SPID) in 2011-2015. Despite all optimistic forecasts,1 GDP research intensity resulted from the implementation of SPID in 2011-2015 was lower (0.50%) than before the Program was launched (0.69% as of 2010).2 Simply put, the 2011-2015 State Program of Innovative Development was a complete failure: current GDP research intensity is half as high the threshold needed to ensure scientific and technological security (European Union experts set this threshold at 1.0%).


Results of the State Program of Innovative Development: key performance indicators

A number of key performance indicators expressively depict degradation in the development of Belarusian science and innovation as compared to 2010:

  1. a reduction in the proportion of national spending on research and development by 0.17% to 0.52% of GDP, which is the lowest rate in the entire post-Soviet history of Belarus (for comparison, this proportion was 1.47% in 1990);3
  2. a reduction in the proportion of the workforce engaged in high-tech and medium-tech economic activities by 0.3%, and by 1.3% in knowledge-intensive activities;
  3. a 1.1% reduction in the proportion of investment in reconstruction and modernization (in the total amount of capital investment);
  4. a 1.1% fall of the invention coefficient (requested patents per 100,000 population);
  5. a reduction in the proportion of shipped innovative products in the total amount of products shipped by 2.0% against 2010 and 2.8% against 2005;
  6. a reduction in the proportion of small and medium enterprises involved in joint innovation projects (in the total number of surveyed companies) almost by half;
  7. a 27.0% proportion of innovation-active industrial organizations (against the 40.0% SPID forecast for 2011–2015);
  8. a reduction in the number of organizations engaged in research and development by 11 units, etc.4

Diversification of funding sources: failure at the top, sabotage from below

Preliminary data for 2015 indicate a continuing trend towards a further decline of the proportion of public expenditure on research and development, scientific, technical and innovative activities (as a percentage of GDP).5 According to the Ministry of Finance of Belarus, government spending on scientific, technical and innovative activities as a percentage of gross domestic product in 2014 (0.23%) decreased by 0.8% against 2013 (0.31%).6 A similar trend is observed in terms of the ‘proportion of public R&D expenditure in GDP, %’: it decreased from 0.23% in 2013 to 0.20% in 2014.7

The analysis of the composition of domestic spending on research and development (with respect to funding sources) shows that the proportion of the allocated budget funds constituted 43.6% in 2012, 47.6% in 2013 and 48.0% in 2014. So, the task to reduce the proportion of funding of science from the national budget over the past three years was not carried out. On the contrary, it was steadily increasing. This was caused by the fact that the diversification of domestic expenditure on research and development did not go as well as planned. From 2010 to 2015, the proportion of budgetary funds went down 9.8% and those provided by foreign investors (including loans) by 1.2%. At the same time, the proportion of own funds increased by 5.6%, off-budget funds by 0.3%, and funds of other organizations by 5.6%.8

As a result, the increase/decrease surplus in the proportion of the main sources of funding made up a tiny 0.5%. At least a half of this surplus was achieved thanks to own funds, which are rapidly devaluing and shrinking due to the rampant recession.

The proportion of venture capital as one of the essential factors of stable funding of the high-risk innovation sector of the economy still remains so small, that its values are not listed in the Innovation Union Scoreboard (IUS-2014) for the Republic of Belarus.9 Even the modest innovation funds are not being used in full10 because public sector entities cannot afford to take risks, because the punishment in case of a failure can be severe (up to imprisonment).11 The diversification of sources of funding of science and innovation not only failed ‘at the top’, but also is sabotaged from ‘below.’

So, the five-year-long efforts aimed at diversification of domestic expenditure on research and development had a zero effect (at best) with regard to the attainment of the main goal, i.e. a more stable financing of research and innovation areas from extra-budgetary resources. This means that in conditions of a protracted crisis and the growing negative macroeconomic trends (a GDP decline, devaluation of the ruble and other currencies), the science and the innovation sector of the economy will experience an acute shortage of funding and, as the most vulnerable one, may suffer the most.

Scientific organizations and personnel: ‘optimization’ at an accelerated pace

The number of organizations engaged in research and development peaked in 2012 (530) and has been going down since then: 482 in 2013 and 457 in 2014. A decline is observed in all sectors: from 104 in 2012 to 94 in 2014 in the state sector; from 352 in 2012 to 294 in 2014 in business; from 70 in 2012 to 66 in 2014 in higher education.12 The meager proportion of small and medium enterprises involved in joint innovative projects in the total number of surveyed organizations decreased from 0.52% in 2013 to 0.40% in 2014.13

The same trend continues with respect to personnel engaged in research and development: over the past five years, the decline reached 15.0% in all sectors. Over the past three years, the decrease in personnel equally affected both the commercial and public sectors (11.1% and 11.2%, respectively). The higher education sector was affected to a lesser extent (5.5%), among other things, because teaching is also a cushion side job.

A structural analysis of the decrease in personnel engaged in research and development shows that the greatest reductions take place among technicians (15.8% in 2012–2014) and, almost equally, researchers (10.0%) and support staff (10.5%).14

With regard to the branches of science, personnel engaged in research and development declined most in the field of social sciences (down 20.0%, including doctors by 7.5% and associates by 14.9%), agricultural sciences (down 13.6%, including doctors by 15.7% and associates by 6.8%), engineering sciences (down 10.0%, including associates by 7.5%, while the number of doctors was up 1.2%), natural sciences (down 8.8%, including doctors by 8.6% and associates by 5.8%) and medical sciences (down 3.7%, including doctors by 14.6% and associates by 3.3%).

Particularly striking is the decrease in the number of PhDs in agriculture (15.7%) and healthcare (14.6%). Against the background of the total reduction in the number of scientific personnel in all areas, only humanities inspire ‘quantitative optimism’: in 2012–2014, the number of researchers increased by 6.4%, including doctors by 5.0% and associates by 1.5%.15

The Belarusian-style paradox of innovation

According to the Global Innovation Index 2015 published by Cornell University, INSEAD business school and the World Intellectual Property Organization, Belarus stepped five positions up in the country ranking from 58th in 2014 to 53rd in 2015 leaving behind Romania (54th), Armenia (61st) and Ukraine (64th), but did not catch up with Russia (48th), Poland (46th), Lithuania (38th) and Latvia (33rd). The improvement was achieved in the following three dimensions: Human Capital & Research, Market Sophistication and Knowledge & Technology Outputs.

Progress in the rankings was hampered due to a poor performance in the dimensions of Institution with the worst sub-indexes in Governments Effectiveness and Rule of Law; Business Sophistication with the worst sub-indexes in Innovation Linkage, Knowledge Absorption, Creative Outputs, and also Creative Goods & Services and Online Creativity.16

Despite the “Market Sophistication” reported in the Global Innovation Index, the number of organizations that implement technological innovations is still decreasing. Their number peaked in 2011 (443) and dropped to 383 in 2014 (down 13.5%). A reduction in the number of enterprises occurred in almost all areas of innovation activity.17

Despite the positive results in the five-year term, over the past two years, the proportion of organizations implementing technological innovations shrank from 22.8% in 2012 (five years’ best) to 20.9% in 2014.18

The proportion of shipped innovative products in the total amount dropped from 17.8% in 2012 and 2013 to 12.5% in 2015.19 The amount of shipped innovative products decreased from the 15.4% peak in 2013 primarily due to a decrease in the amount of shipped machine engineering products by 51.0%. An avalanching 87.0% decline was observed in the mining industry.20

As a result, the proportion of exports in the total amount of shipped innovative products decreased from the 64.3% peak in 2012 to 59.7% in 2014. According to preliminary results of 2015, the situation got worse primarily due to economic problems faced by the main importers of Belarusian high-tech products (Russia, Ukraine and CIS member states).

The year 2015 could not turn the tide of the 2014 landslide in the very important R&D performance index: total patents filed and total patents granted, which is also included in the Global Innovation Index. The negative trend began in 2011, when the number of filed patent applications began to decline. In 2014, the decrease became drastic: from 1,634 in 2013 to 757 in 2014 (54.0%), most of which were national applications (the number decreased by 837). Such a low index had not been observed for over 15 years (comparable numbers were reported in the mid-1990s).

The number of patents granted also dramatically decreased from 1,027 in 2013 to 887 in 2014 (a worse index was only reported in 2005). As a result, the number of valid patents dropped from 4,478 in 2013 to 3,913 in 2014 receding to the level of 2005 (3,794) in 2015.21

So, we have a Belarusian style paradox: a step up in the Global Innovation Index through a reduction in the proportion of innovative products and a downfall in the research and development performance.


In the conditions of deepening economic recession and exhaustion of resources for the mobilization development model, the drop of the GDP research intensity Belarus’ GDP twice below the threshold and a decrease in the proportion of domestic research and development expenditure to the lowest level in the entire post-Soviet history of the country put the question squarely: will the crisis bury the sprouts of the innovative economy, or will innovations be a key parameter of a new model of the economy and society? It is clear that an optimistic (and hardly probable) scenario of the science sector development is only possible if the country gets off the usual but hopeless track of the mobilization economy to an unusual, complex, but more promising path of innovative development.