Chirkunova 2021 Trends In Innovative Digital Economy Development During The Pandemic

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A conference paper by E. K. Chirkunova of Samara State University of Economics and E. S. Podbornova and M. M. Manukyan of Samara National Research University, Trends in Innovative Digital Economy Development During the Pandemic, published in European Proceedings of Social and Behavioural Sciences (GCPMED 2020), 2021, pages 1342–1343 (DOI 10.15405/epsbs.2021.04.02.159). The article examines how enterprise closures, falling consumer and investment demand, rising unemployment and remote work during the COVID-19 pandemic accelerated digital transformation and Industry 4.0 adoption in Russia. Noting that support mechanisms from the 2008-2009 crisis targeted large companies rather than small and medium-sized businesses, the authors propose state assistance and innovation strategies prioritizing small businesses, start-ups and affected industries.

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European Proceedings of
Social and Behavioural Sciences
EpSBS
www.europeanproceedings.com e-ISSN: 2357-1330

DOI: 10.15405/epsbs.2021.04.02.159

GCPMED 2020
Global Challenges and Prospects of the Modern Economic
Development

TRENDS IN INNOVATIVE DIGITAL ECONOMY
DEVELOPMENT DURING THE PANDEMIC

E. K. Chirkunova (a)*, E. S. Podbornova (b), M. M. Manukyan (c)
*Corresponding author

(a) Samara State University of Economics, Soviet Army Str., 141, Samara, Russia, ekchirkunova@gmail.com
(b) Samara National Research University, Moscow Highway, 34, Samara, Russia, kate011087@rambler.ru
(c) Samara National Research University, Moscow Highway, 34, Samara, Russia, marinaarm89@mail.ru

Abstract

The article substantiates the relevance of the formation of new trends in the development of innovative
digital economy in Russia, which should contribute to the achievement of optimal growth indicators for
individual sectors of the economy and become triggers for the development of the entire economic system.
In the context of the growing economic crisis caused by the mass closure of enterprises, falling consumer
and investment demand and rising unemployment, the development of directions for resetting development
strategies in the field of innovation and the introduction of digital technologies, as well as state support
measures aimed at stimulating both the entire economy and individual groups of its economic entities, plays
a crucial role. When planning further government assistance measures, priority should be given to industries
focused on meeting the needs of the population that have changed during the pandemic and increasing
support in the sector of small businesses and start-ups that are experiencing difficulties in obtaining
financial assistance. The analysis of target indicators of innovative development and digital transformation
is carried out, the key positive and negative aspects are highlighted. Groups of measures are proposed for
enterprises from the most affected industries, as well as the system-forming sector of the economy. The
study made it possible to analyze the degree of impact of the pandemic on business innovation and
determine the directions for further resetting the strategies of innovative development and digital
transformation of the Russian economy.

Keywords: Digitalization, digital transformation, innovations, innovative economy

This is an Open Access article distributed under the terms of the Creative Commons Attribution-Noncommercial
4.0 Unported License, permitting all non-commercial use, distribution, and reproduction in any medium, provided
the original work is properly cited.
https://doi.org/10.15405/epsbs.2021.04.02.159
Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

1. Introduction

In the context of the COVID-19 pandemic, the relevance of the scientific problem is due to the
challenge to reset all sectors of the economy of each country as a whole and the requirement to develop
new scenarios for the development of an innovative digital economy, taking into account structural changes.
To a greater extent, medium and small businesses pass the test of survival, since the mechanisms for
supporting large companies were worked out back in the crisis of 2008-2009, and no universal tools have
been developed for small and medium-sized businesses. Also during the epidemic, employers were forced
to organize employees' work remotely, which accelerated the transition of organizational interaction to
digital technologies to support real-time production processes, which corresponds to the transition to
Industry 4.0 in social terms (Gokhberg, 2019).
As a result, the current situation requires new effective management decisions based on a
comprehensive analysis in a short time, optimization of production resources and rapid implementation of
technological initiatives to support innovative processes in the economy, as well as reduce risks for
businesses, enterprises and organizations in the short and long term with the participation of the state, which
should develop synchronously with the changing economy and society (Hanna, 2018).

2. Problem Statement

The Covid-19 pandemic and its impact on the economy was only revealed in 2020, but there are
already a sufficient number of publications on this topic devoted to various aspects of the impact of the
pandemic on the organizational development and efficiency of companies. Thus, some authors consider the
peculiarities of the impact of the pandemic on the structure of the labor market (Bondarenko, 2020), others
analyze various sources of financing and transformation of budget programs for the implementation of
National projects in the context of a pandemic and point to the leading role of the digital economy in the
context of pandemics (Leschinskaya & Makarov, 2020; Pechatkin, 2020).
The introduced emergency regulations have a serious deterrent effect on innovation processes in the
global community. For Russian companies, it is a triple blow due to previously imposed sanctions, falling
world prices for most commodities and food commodities against the background of reduced demand and
supply disruptions due to the coronavirus pandemic. According to the World Bank, the world economy
expects a recession and a contraction to 5.2% (World Bank Group, 2020). In the Russian federation, the list
of industries affected by the pandemic was expanded in October 2020. But at the same time, the pandemic
has sparked increased interest in technologies that are part of a new type of infrastructure. There are authors
who point out that the pandemic has become a powerful trigger for innovation, since it is the introduction
of innovations that becomes the key to the survival and competitiveness of business (Vedyakhin, 2020).

3. Research Questions

The hypothesis of this study is that the impact of the pandemic should give an impetus to the
development of an innovative digital economy in its main components-fifth-generation communication
networks and data centers (Al-Khouri, 2014; Mullins, 2005), as well as a reset of development directions.
Then the task of determining the target indicators of innovative and digital development and the conditions

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Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

that contribute to the formation of new trends comes to the fore. This study is aimed at developing a
methodological approach to assessing the achieved level of innovation economy and digitalization of most
industries, and therefore it is necessary to systematize the main target indicators for their comparison and
development of new directions and guidelines in the current conditions.
As for the overall environment for the development of innovative entrepreneurship in Russia, it
should be noted that in recent years it has significantly improved:
- new development institutions have emerged, which together provide support at all levels of
technology readiness-from basic research to the launch of production facilities;
-clusters, technology parks and business incubators have appeared.
A large set of measures to accelerate technological development and fairly large funds are provided
for in the national projects "Digital economy", "Increasing labor productivity and supporting employment",
"Science", "Culture" and a number of sectoral state programs. For example, the total amount of funding for
the "Science" project in the period 2019-2024 is 636 billion rubles, according to the results of its
implementation, more than 250 large companies will be involved in the creation of technologies with the
participation of organizations participating in scientific and educational centers and centers of competence
of the national technology initiative, 1.5 thousand patent applications are planned. All this allows us to
expect that more than 50% of innovative companies will be active by 2024 (National program "Digital
economy of the Russian Federation", 2019).
Since the COVID-19 pandemic has seen a sharp increase in demand for telemedicine services, online
education, and remote work technologies, it has become necessary to form and develop new infrastructure.
The concept of "new infrastructure" includes a fairly wide range of areas and applied technologies that were
not previously used and were isolated. Now, an additional layer is being added to the traditional
infrastructure — information and communication, which provides support for the digital economy.
Currently, the new infrastructure most often includes 5G communication networks, actively implemented
in many countries, but not yet available in Russia, artificial intelligence technologies, big data and cloud
computing. All organizations should be involved in the digital information environment to operate on
network principles in the coordination of markets and society (Kannan & Li., 2017). The COVID-19
pandemic will slow down some areas of innovation, but at the same time it is likely to cause a surge in new
inventions. The key issue is how the economic impact of the COVID-19 crisis will affect start-up
companies, as well as venture capital funds and other traditional sources of innovation funding. Many
governments are taking emergency relief measures to mitigate the consequences of quarantine and counter
the impending recession.

4. Purpose of the Study

The purpose of this article is to identify and group the main target indicators of the development of
innovative digital economy for the development of areas of correlation of programs and subprograms of
economic development. Identify indicators that can be attributed to the triggers of innovative growth of the
economy. Make a comparison with planned and achieved development indicators. Consider the
opportunities for the growth of the digital innovation economy in the context of the pandemic and the
transition to digital design and modeling of medium and small businesses. Substantiate the need for a digital

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Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

twin in different companies to increase labor productivity, competitiveness and obtain a real economic
effect. In this sense, further standardization and the establishment of uniform methodologies and
requirements for each industry is extremely important. In the final section, suggest conclusions and
discussions for future research.

5. Research Methods

This goal of the study was implemented by conducting an empirical study on monitoring the
implementation of innovations and digital technologies and analyzing possible development trajectories in
the context of a pandemic. The methodological basis of the study was the modern scientific works of
Russian and foreign scientists in the field of digital economy and innovative development. Based on the
results of various applied studies on the formation of digitalization of all industries of the economy,
methodological provisions of different countries of the world on the development of digital technologies
are applied. The main methods used are the synthesis of information, collation of data analysis of different
kinds of sources, and analytical materials. The study used a systematic approach that allows us to consider
economic development as a system of interrelated phenomena and processes. Methods of theoretical
research (abstraction, idealization, induction and deduction) were used to reveal the problem area of
research. To describe the main structural incentives for the development of the digital innovation economy,
the method of intuitive modeling was used.

6. Findings

This article partly continues the research of Belanova et al. (2020), taking into account the global
challenges of innovation development and the digital economy. In the Global Innovation Ranking, Russia
ranked 46th out of 129 in 2019 (WIPO, 2020). One of the main tasks of this process is the transition to a
digital industry, which is based on digital design and modeling. At present, technological leadership does
not just mean economic well-being; it guarantees the very possibility of developing a country and
preserving its sovereignty. Information and digital technologies make it possible to rebuild our present,
adapt to completely new communications, form new competencies and prepare for the successful
implementation of the potential of employees in the conditions of digitalization of the economy. In
accordance with our ideas about the structure of the innovative digital economy, we can identify priority
areas for transformation:
- retraining of personnel;
- digital transformation technologies;
- development of the information society;
- labor functions (Professional standard);
- introduction of digital technologies.
No less important than creating an infrastructure to enable the use of online services is the development
of digital skills of citizens. An empirical analysis of the dynamics of the development of the innovation and
digital economy can be carried out according to different target indicators (Table 1).

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Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

Table 1. Target indicators of innovative and digital development
Forecast Current Program indicators State regulation indicators
indicators indicators
access to information R&D expenditures, as a scientific works; formation of human capital
percentage of GDP, inventions
Average annual GDP
growth rate
demand for utility articles in scientific and selected creation and support of
models; prototypes; technical journals achievements; high-tech industries
industrial designs topologies of
integrated
microcircuits
creation of export of high-tech goods; information models of e-government;
technologies and tools, business processes; e-
know-how; trademarks campus model; IT
service
production of employed in R&D; creation of technology increasing the share of
innovative products patent applications; transfer centers; knowledge-intensive
trademark applications; training of personnel products in GDP;
increasing the volume of
finished innovative
innovative products
products

the achievement of the mass proportion of expanding greater investment in the
"digital maturity» socially important services opportunities in the domestic decisions in the
that are available in field of information field of information
electronic form; technology technology
percentage of households
with broadband Internet
access
Source: authors.

The level of innovation activity of organizations in the Russian Federation for all types of economic
activity in recent years has decreased from 14.6% in 2017 to 9.1% in 2019 (Federal State Statistics Service,
2020). It should be noted that the peculiarity of the Russian Federation is the fact that public spending on
innovation is significantly higher than that of private business, and in the most technologically advanced
countries — on the contrary. Government spendings on R&D towards GDP (1%) in Russia is even higher
than in Japan, Canada and Switzerland. But in general, investments in research and developments are lower,
because there private business invests in innovation three times more than the state - about 3% of GDP, and
in Russia - only 0.3% of GDP. Let's compare the target value of innovation and digital development with
the current value of each indicator (Table 2).

Table 2. Some target indicators of innovative and digital development programs in comparison with the
current value in the Russian Federation
№ Target indicator The target value The current value
(2019) (Federal State
Statistics Service)
1 R&D expenditures, as a percentage to 3 1
GDP

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Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

2 share of Russian publications 3 2.67
researchers in the total number of
publications in world scientific
journals,%
3 share of exports of high-tech goods in the 2 0.25
total world
volume of exports of high-tech goods, %

4 the number of domestic patent 20 1.59
applications on inventions filed in Russia,
per 10 thousand people.

5 the share of industrial enterprises engaged 40 9.1
in technological innovations in the total
number of
industrial production enterprises, %

6 the mass proportion of socially important 95 -
services that are available in electronic
form, %
7 percentage of households with broadband 85 75
Internet access, %

Source: authors.

In the Russian Federation, the industrial production index (IPI) in the 3rd quarter of 2020 amounted to
95.5% compared to the 3rd quarter of last year, for mining enterprises — 88.7%. Production volumes
decreased in almost all significant sectors of the economy: the output of petroleum products decreased by
39.4%, motor transport — by 20.4%, metallurgy products - by 2.2% (Federal State Statistics Service, 2020).
Among the key sectors of the economy, the pandemic did not affect only the chemical industry,
manufacturers of machinery and equipment, rubber and plastic products, electrical equipment, wood and
paper. Enterprises of the non-petrochemical industry managed to maintain stable performance in the
"coronacrisis economy". For example, in the production of products to combat the pandemic, raw materials
for protective glasses, masks, gloves and suits for doctors, as well as medical products and equipment,
antiseptics and medicines were in demand. The pandemic helped a number of enterprises to repurpose them:
factories began to produce air sanitizers, decontaminators and other products to combat the virus. As a
result, the volume of production of medical equipment increased and the index of production of medicines
and medical products increased.
Thus, it should be noted that the opportunities for innovative growth and digitalization are rather sectoral
and are associated with two groups of incentives — structural (socio-economic changes, state policy) and
conjunctural (financial condition of the industry, its growth, availability of financial resources) (Table 3).

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Corresponding Author: E. K. Chirkunova
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eISSN: 2357-1330

Table 3. Key structural incentives for innovative growth and digitalization by sectors
Incentives 2017-2018 2019- 2021-2024
2020
The growth of the - Healthcare, education, insurance, IT, industry
domestic market
The growth of the Gas production and transportation, chemicals, transport infrastructure
export market
Import Agriculture, food Light industry, electrotechnology and electronics, building
substitution industry, household materials, pharmaceuticals
chemicals, tourism
Support for the Infrastructure (electricity, heat, roads), services (repairs and maintenance)
state of fixed
assets
Source: authors.

It is the level of internet penetration and the full range of modern industry achievements 4.0 (big data
processing technologies, the internet of things, virtual and augmented reality, 3D printing, blockchain,
autonomous robots) that contribute to digital transformation and influence changes in various sectors of the
economy (the structure of demand for personnel and employment, e-commerce, public and municipal
services) (Strang & Sun, 2017).
The use of a digital twin allows to significantly expand the capabilities of cloud-based analytical
services used in the concept of the industrial internet of things of the fourth industrial revolution. The main
resource of the digital twin is information, and in production it is real assets. It follows that the main function
of digital transformation is to improve production processes. Using digital twins, companies can create
copies of their smart businesses in a digital environment, identify vulnerabilities (in components, systems,
processes, and other assets), test potential solutions, model the results of interactions between components,
and predict stochastic changes that may occur during operations. Such simulation saves the organization
the time, resources, and money needed to test working hypotheses in practice. But it should be noted that
the question of using digital twins can only be raised if their implementation will reduce production costs.
For small and medium-sized enterprises, this process still brings high costs.

7. Conclusion

Thus, the study made it possible to analyze the degree of impact of the pandemic on business
innovation and determine the directions for further reset of development strategies. At the present stage,
two directions of economic transformation are most relevant, ensuring its transition to a new economic
paradigm:

– technical and economic re-equipment of enterprises' activities aimed at using digital technologies;
– personnel policy related to investment in human capital and reproduction of social relations that
ensure the development of human capital and the susceptibility of the economic system to
innovations.

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Corresponding Author: E. K. Chirkunova
Selection and peer-review under responsibility of the Organizing Committee of the conference
eISSN: 2357-1330

To implement these directions, a fairly wide range of measures should be taken, which can be taken
both at the level of a separate sector of the economy, and individually by entrepreneurs:
- modeling cash flows taking into account debt levels and important transactions to create pragmatic
innovation financing plans based on emergency triggers;
- forecasting of global wave effects in production and sales for planning development scenarios based
on the strategies of the "digital twin", which will allow to most effectively determine the necessary
resources for the implementation of the project; at the early stages to form risks and problems that
may arise and formulate ways to solve them, if necessary;
- build crisis response teams to facilitate an open and consistent flow of accurate information between
key stakeholders to support trust in business innovation processes;
- development by the state of additional tax benefits up to the suspension of tax payments and
regulation of financial support of innovative projects;
- digitalization of innovation processes based on a digital twin strategy to reduce costs and increase
the attractiveness of customer loyalty programs to stabilize demand (for example, priority segments).

The main supporting tool should be state financial assistance not according to OKVED (Russian
Classification of Economic Activities), but according to the results of reporting business revenue, which
will allow large enterprises, medium and small businesses to choose directions for further reloading
innovations taking into account global challenges.

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eISSN: 2357-1330

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