(ProQuest: ... denotes formulae omitted.)IntroductionWhen analysing economies with regard to their innovation, efficiency modernization, the researchers can hardly find more diverse interesting example then the Caucasus region (Barrett, 1995; Kolesnikova Malovichko, 2004; Mamedov, 2004; Gerasimov et al., 2014; or Kolesnikov, 2014). Sandwiched between Europe Asia, the regions boast both wild breath-taking sceneries, a blend of modern civilizations historical traditions, as well as versus modernized riddled with innovations investments (Kolossov Toal, 2007; O'Loughlin, 2011; or Tatuev, 2014).If raising anthems for the subject of our study in a biblical-style language, it might look as follows: and God made a secluded firmament enclosed with mountains populated it with many nations, called this Babylon the North gave the created laboratory for integrating languages, cultures the economy to social scientists.The economic analysis algorithm raised in our paper is not too complicated. It is centered on revealing, registering, proving the main trends typical for a particular historic period. Then, it proceeds to trying to detail how such trends are embodied in local social communities (Hoschle et al., 2015). This is where researchers face the most difficulties: like tailors, they attempt to dress different nations economies at different development stages in these trends, squeeze their customs traditions, sometimes exotic, in the general social formats. However, as a fashion designer does not see a body, a sociologist does not see standard nations, economies cultures. Only then a researcher proves to be a true professional: does she or he manages to distinguish the general historic trends in a patchy exotics of the daily life? If so, then the study is within the scientific boundaries. If no - it sinks in tons of ethnographic features.The scientific novelty of the subject of the paper is determined by the overlapping of the research area the relevancy of the economic enclaves for innovative development of the Caucasus, all-round beset by the globalizing Russian national market economy. The purpose of our paper is to identify the reasons underlying sustainability of this within the surrounding space of the modern economic system in Russia. The objective is to outline the specifics of modernizing the along the three aspects of its transformation: innovativeness, efficiency, globalization. Methodology: comparative analysis, abstract-logical pattering, ethnical economics. The main constraints of the study are geographic, time-related, economic. The major characteristics of the source base include the specifics of the Caucasian social-and-economic works known predominantly in the local professional environment.This paper is organized as follows: the first section outlines the basic premises. The second section details the changes that take place under the impact of innovations, increasing efficiency involvement of the Caucasus in the processes of globalization (Mamedov, 2010). The third section brings in an empirical analysis of the innovation modernization of the Caucasus using the apparatus of the Okun's law. Finally, the summary conclusions highlight the main results findings implicate the pathways which can become the starting points for further studies in this field.1. Traditional Caucasus methodologyThis theoretical discussion focuses on the category of traditional economy, understanding which determines the ultimate success of the undertaken analysis. Traditional means an where customs, traditions believes prescribe the principles of economic organization for production of goods services; in other words, is built up around traditions, according to which a particular society lives. …