How national security panics in Russia could stifle innovation and hurt its economy
Spy mania in Russia has created an environment that's stifling innovation
The arrest of accused "spies" has risen dramatically since Moscow began its invasion of Ukraine, Pavlov and other human rights experts, reports Business Insider's Jennifer Sor in the article, How national security panics in Russia could stifle innovation and hurt its economy.
That could end up having a big knock-on effect on Russia's already-weakened economy. Possible impacts include decreased investment, decreased consumption, and slower growth as Russia shifts away from a capitalistic society, says London Business School's Richard Portes.
"You do have an inhibition on risk-taking, innovation," Portes told BI on the intensifying pursuit of foreign agents in Russia. "For those who remain, you're not going to get any dynamic economic activity. Aside from the brain drain, aside from the drain of young people, you're not going to get any innovation. And I think that's the medium-term consequence of all this: disastrous."
Russia's economy is showing some signs that the kind of risk-taking associated with innovation and entrepreneurship is on the decline. Innovation in Russia has fallen behind the nation's level of development, according to a 2024 ranking from the World Intellectual Property Organization. Patent filings fell 13% in Russia in 2022, while patent filings from foreign applicants dropped 30%, according to data from the Russian Patent Office.
Russia minted just 240,458 new LLCs in 2022, about half of the number of new companies that registered in 2015, according to the World Bank entrepreneurship database.
