Importance The article discusses the improvement of the cooperative sector's performance in terms of import substitution during the EU and U.S. economic sanctions. Objectives The research analyzes the role of the cooperative sector in ensuring the innovative development and import substitution in Russia and elaborates respective proposals for enhancing the cooperative sector's security. Methods The research draws upon the methods of logic and historical research, analysis and synthesis; identifies opportunities of the cooperative sector for ensuring the innovative development and import substitution in Russia when they accede the innovative cluster. Results We systematized prerequisites and conditions for origination and integration of various corporate forms into the cluster and relationships between advantages cooperatives may provide in small and middle-sized entities in the Russian entities, and cost effectiveness of such clusters. We outlined proposals to increase the efficiency of the cooperative sector in ensuring innovative development and economic security of Russia. The article also reviews the specifics of taxation of cooperatives and its members. Conclusions and Relevance Currently, innovation clustering should become a common development trend and a general characteristics in the process of forming markets in the constituent entities of the Russian Federation. The article shows that the innovation clustering process relates to the originating market of program-based investment in innovative development as part of the cooperation between the State at the macro- and mesolevels, large financial capital, large, middle-sized and small innovative entities and cooperatives.
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