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Abstract The goal of the study was to analyze the impact that innovative transformation of industry has on the socio-economic development of the Russian Arctic and to formulate proposals for accelerating and enhancing innovative processes in the industrial sector of the country’s Northern territories. We have established that, given the internal and external threats, challenges, restrictions and sanctions of Western countries, innovations and R&D should be stimulated, as these activities, primarily connected to impact of industrial transformation on socio-economic development of the Arctic, are particularly important not only from a scientific but also from a practical standpoint. We have considered the external and internal challenges and restrictions that hinder innovative development in the Arctic. We have confirmed that while growth of industrial production in the Arctic is ahead of the average indicators in the Russian Federation, it is largely due to extensive factors connected to intensified development of natural resources, rather than to generating and implementing innovative technological projects and usage of information technologies. We have analyzed the potential to increase the number of organizations implementing technological innovations to 50% by 2024 (as established by the Decree of the President of the Russian Federation No. 204 of May 7, 2018), confirming that it would be difficult to achieve the target indicators without special policies and measures, given the current trends and rates of innovative development of the Arctic regions. Considering the integral estimate, we have found that the Arctic regions have low susceptibility to innovation. We have established that the financial capabilities of Arctic enterprises for generating and implementing innovative projects are limited. For example, only one of the thirteen enterprises studied is capable of technological innovation.
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