The author reveals the concept of innovative potential of the region and substantiates the role of institutional factors in its development. It is emphasized that building up the innovation potential offers not only great prospects for the regions, but also creates serious challenges for regulating the innovations. The concept of an institutional trap forms a theoretical basis of the article. To a large extent, the system of political and public administration is “responsible” for the emergence of institutional traps. The author identifies and characterizes the main institutional and socio-cultural barriers that impede the effective development of the region’s innovation potential and the functioning of its innovation system. The contradiction between a rigidly hierarchical nature of public administration system and a network nature of the development of innovative structures is revealed.
