The article analyzes the state and problems of cluster development in the real sector of the region based on the materials of the Pavlodar region. The main problem of innovative development of the Pavlodar region, as well as in all regions of Kazakhstan, in general, is the lack of innovative activity of enterprises, which is reflected in the volume, frequency and efficiency of their innovations. At the same time, most of the enterprises belonging to the real sector of the economy have sufficient resources for the development of innovative activity. However, the prospects for their interaction with enterprises in other sectors and sectors of the economy for the purpose of technology transfer are insignificant, which, in general, doesn’t meet the principles of balanced spatial development of the territory formulated by the program for the development of territories of the Republic of Kazakhstan until 2020. One of the ways to solve this problem is formation and development of a cluster approach and interaction of business entities. The article assesses the efficiency of the cluster’s functioning as an institution of regional development. On the example of the metallurgical cluster of Pavlodar region, the main ways and methods of forming cluster initiatives in the regional economy are considered, a SWOT analysis of the development of the metallurgical cluster of the region is given, and its main problems are identified; identifies priority directions of clusters’ development (metallurgical cluster, including the production of final products, the cluster of railway engineering, agri-food cluster), the realization of which in the region could create the conditions for the emergence and full development of a number of new highly specialized sectors such as cluster chemistry, cluster of road and construction machinery, transport logistics cluster, cluster of modern production technologies and engineering, cluster of manufacturing components for machinery and equipment and cluster of industrial electrical engineering and equipment for power engineering. The authors also noted that the realization of regional development strategies of cluster initiatives can potentially lay the foundations for clusters “future days”, such as: cluster of resource efficiency and environmentally processing, the cluster of new energy, the cluster of innovative medicine, tourism and recreational cluster.

Main problem: in conditions of increasing competition, when characterizing commercial structures, a fundamental role is given to innovations, which occupy important place in economic life of the organization. Accordingly, the study of their essence and content is of particular importance for growth of competitiveness of organizations, which determines the relevance of study. Purpose: to investigate essence of innovation and innovation process in retrospect and in modern conditions as main prerequisite for improving competitiveness of commercial organizations. Achieving this purpose required solving following research tasks: to reveal the content of theoretical approaches to the study of the main aspects of interaction between business and government in modern science; the differences between the concepts of “novelty”, “know-how”, “innovation” are investigated; the relationship of the triad of concepts “novelty”, “know-how”, “innovation” is determined; concept of “innovation” has been studied in retrospect; concept of “innovation” in market economy is studied (foreign experience); approaches to definition of concept of "innovation" in international innovation theory and practice are defined; content of innovation process is presented, as well as author’s alternative scheme of innovation process; authorэs view on interpretation of concepts of “innovation”, “innovation process” in modern conditions is presented. Methods: theoretical and methodological basis was concepts, hypotheses and theories presented in works of domestic and foreign researchers. The methodology is based on systematic approach, within which methods of comparative, factorial, subject-object, structural-functional, statistical analysis and extrapolation have been applied. Results and their significance: article examines concepts of “innovation”, “innovation process” in retrospect and in modern aspect. Approaches to concept of "innovation" are systematized, an alternative scheme of innovation process is proposed. It is proved that in modern conditions innovation should be considered as process system reflecting all aspects of innovation process, main purpose of which is to achieve efficiency