Pandemic Challenges for the Technological Startups in the Russian Regions

Abstract

Technological startups help to adapt economies to the global risks and allow one to track future trends. This paper identifies the main trends and birth factors of new high-tech companies in the Russian regions during 2013-2020. In 2020, fewer than 10,000 startups were cre-ated, this number has been steadily declining (by 40% since 2015), especially during the pandemic (-21%). Most of the startups are concentrated in Moscow, the Moscow region, St Petersburg, and the largest metropolitan areas. The share of the Leningrad, Belgorod, Kaliningrad, Lipetsk, Ulyanovsk, and Kaluga regions is growing due to the proactive policies of local authorities. Most startups are associated with knowledge-intensive services for business (B2B) and digital technologies. In 2020, their number increased in pharma-ceuticals (about 100%) and in the production of medical devices (by about 30%). Based on the results of econometric analysis, start-up activity in Russia, analogous to countries with an estab-lished market economy, depends upon human capital con-centration, market access, and a favorable business climate. Universities, through attracting students, especially those in STEM specialties, stimulate startup creation; although the share of university startups does not exceed one third of a percent. Budgetary and university expenditures on R&D are ineffective in terms of creating new companies. The influence of development institutions on start-up activity was not found, while clusters and technology parks have a weak effect. The growth of startups is lower in regions with a predomi-nance of large organizations, as well as in resource centers. The latter may be one of the manifestations of the “resource curse”. Startup activity is stable over time and depends on the situation in neighboring regions, which limits the chances to change the situation by means of entrepreneurship support policy. During the pandemic, start-up activity decreased minimally in regions with large metropolitan areas and a high level of education. Recommendations include tools for establishing a more balanced cross-regional situation by implementing the model of an entrepreneurial university, an expansion of start-ups' access to capital and markets, and the regionalization of entrepreneurship policies.