Importance The article identifies primary development trends of the Russian timber industry and analyzes forest product and its exports structure. Objectives The objective is to formulate proposals for the Russian timber industry modernization and innovative development based on the analysis of its trends and financial condition, considering the experience of developed countries and the Russian economy specifics. Methods In the study, we applied methods of economic and financial analysis, expert assessment, analytical methods for information collection and processing. Results Urgent problems impeding competitiveness of the Russian timber industry in the long term are highly-qualified personnel deficiency; underdeveloped domestic manufacture of advanced means of production, machinery and equipment; inadequate infrastructure; depleted stocks of affordable timber; low level of responsible forest management culture. High dependence on foreign equipment and components makes domestic producers extremely vulnerable. Conclusions The timber industry needs modernization of production within the existing technologies and investment in innovative development. A fully integrated solution implies forming branch associations to coordinate the activities of enterprises to the extent of creating technological platforms and knowledge incubators; lobbying the sectoral interests in government agencies; synchronizing State programs to support the real sector through concessional lending; strengthening cooperation with local educational institutions.
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