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In the article the competitive positions of the Russian Federation determined by a relatively low level of the innovative activity of the economic actors in comparison with their foreign counterparts were analyzed. The theoretical model of the motivation of the entrepreneurs for the realization of the creative and innovative work was suggested. It includes the subjects, formal norms (legislation), informal rules (business culture typical of the economic community), incentives and limitations. The Volgograd region was chosen as the empirical base for the analysis of the model. Also the existing indices characterizing the innovative activity of the enterprises within the given region were studied. The contradictions arising at the functioning of the model under analysis were found. The recommendations for its improvement for the creation of the necessary conditions contributing to the growth of the competitive ability of the economy were suggested. The directions of the modernization mentioned above will create additional opportunities for the growth of the ratings positions of both a specific region and the country in the whole. Keywords—innovations, competitive ability, region, model,encouragement

proceedings of the international scientific conference "competitive, sustainable and secure development of the regional economy: response to global challenges" (cssdre 2018)

Improvement of the institutional model: Encouragement of innovative activity as a condition of growth of competitive ability in the regional economy