GLOBAL CHALLENGE OF SANCTIONS: INNOVATIVE DEVELOPMENT OF RUSSIAN REGIONS

Development prospects of territories depend on their ability to guarantee sustainability under the influence of global challenges. Since 2014 Russian economy has been under the influence of sanctions. Although there are different views on the successfulness of this tool, this global challenge is obviously a serious test for Russian innovative enterprises. Russian innovation sector is developing poorly; the economy largely relies on the import of new technologies and hi-tech equipment. The aim of this research is to evaluate regions' innovative development under the influence of sanctions. For this purpose authors developed an equation of regional innovative development where four main factors were defined by means of decomposition; their influence was widely discussed and is scientifically proven: the effect of human assets, productivity effect of the sector generating knowledge, costs effect, productivity effect of the sector producing innovative products. Factor analysis performed in 51 regions shown that at least half of the regions reduced innovative activity. Leading regions were seriously affected. However, productivity effect of the sector generating knowledge shows that some regions have laid the groundworks allowing them to ensure sustainability of regional innovation system under conditions of global challenges. Following the analysis, authors came to conclusion that temps of innovation activity slump are not as significant as it was expected.Further innovative development requires significant state and private investments in human assets, system of knowledge generation. Otherwise, the effect of sanctions will grow.