Dormant consciousness turns into a loss of business for Russia

25.07.2011 — Analysis

Russia will be unable to become an innovation-driven country in the near term, as, despite its tremendous area, there is no demand for innovative developments. Large companies prefer to purchase off-the-shelf technologies in other countries; talented scientists, in their turn, leave Russia, finding no comfort in living and working at home. Experts see monopolists as the main hindrance to progress, as being the closest to government money. The "RusBusinessNews" columnist is sure that only transnational corporations can make them move; however, the authorities show no haste to allow them access to the Russian market.

Experts state that there are interesting projects and money in Russia, but something is amiss with innovation-based business. The reasons that are given are very different. Dietrich Möller, president of Siemens AG in Russia and Central Asia, thinks that the country has a large gap between science and business, thus making it difficult to turn knowledge into money. Alexander Galitsky, managing partner of Almaz Capital Partners, sees the reason in damaged education. During the Soviet time, core departments at universities and institutes formed industry-related research institutions. Graduates worked at these institutions and developed new technologies. Today, there are no industry-related institutions and no core departments. The expert believes that innovations passed into hands of leading enterprises that should regenerate core departments and provide conditions for applied research.

In the meantime, Oleg Sienko, General Director of the Uralvagonzavod Research and Production Corporation, OJSC, warns that no fast results should be expected. The defense industry has been dormant for 15 years, being enthralled by illusions that enterprises were going to be blessed with golden showers. Within that time the American military and industrial complex was able to earn sizeable money, having commercialized its military know-how such as GPS.

Russia is still without a law that would govern the conversion-related issues, though its urgency was emphasized by the government back in 2005. Today, research cannot be recovered by "pushing the switch button": there used to be science without demand, now there is demand without science. The corporation managed to retain some research capacity, but it needs money to do research. The money is tight, as there are no orders from the Russian military. O. Sienko does not feel that the country has embarked on the course of fundamental development. In fact, the process has not even started: Any modernization needs intelligent people, but they cannot be born in one day.

Alexander Galitsky also thinks that the establishment of the innovation market takes time and effort. In the expert's opinion, the quantum laboratory that was opened in Skolkovo will be able to have some practical effect in about ten years. It will be useful if by that time at least 50 venture capitalists would strike roots in this special economic zone. The main thing is that talented people should want to self-actualize in Russia, which means that they should feel comfortable here. However, comfort is somewhat problematic.

The research known as the Barometer for Russian Innovative Development has found out that 80% of entrepreneurs and scientists do not trust the government due to absent fair competition and existing corruption among officials. Excessive inspections, endless procedures for approvals, prohibitive regulations make adoption of innovations extremely difficult. Bulat Stolyarov, General Director of the IRP Group, asserts that the business community says: "We do not need Skolkovo - you should improve the environment".

Dmitry Pumpyansky, Chairman of the Board of Directors at the Pipe Metallurgical Company, OJSC, thinks that it is not enough to change the business climate - the revolution must penetrate into the mind of Russian scientists. The latter are still more concerned about offering ideas that are not economically feasible rather than products. Business measures the innovative product relying on the integrated group of factors: the price - turnaround time - economic impact. Based on the received results, investors decide which innovative product - domestic or foreign - they should choose for their investment. D. Pumpyansky decided to buy an induction motor drive for the electric locomotive from Siemens. The billionaire is sure that there will be no innovations in Russia until the government uses incentives to modernize the industry, making environmental and manufacturing standards more stringent.

Dietrich Möller pointed out that today's Russian ruling class should learn to think forward within a long range: The officials who got used to selling oil are not able to understand how six years can be spent on manufacturing of a new turbine, while waiting for another six years until the invested funds are paid back. They are also unable to comprehend the fact that innovations are not a single-handed endeavor in the present day economy and cannot be stored for future use - the fact that applies to the fullest extent to military technologies. Therefore, the advice given by Siemens' top-manager is that cooperation should be maintained with different partners - including competitors.

Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, believes that doors should be opened for small and large foreign companies not only in the sector of high technology, but also in the sector of raw materials. In his opinion, transnational corporations will wake up Gazprom and increase its demand for new technologies. The government of Vladimir Putin pursues the totally contrary policy: State-owned companies have exceptional privileges on the market as compared to private businesses. This contributes to further inefficiency of the Russian economy.

Experts assume that society face the problem of damaged communication relationships: The authorities are not interested in communication with the business community, while the business community has no desire to communicate with the authorities. The government puts all its enthusiasm into its projects related to the 2014 Winter Olympic Games and the 2018 World Cup that will take place in Russia. All these ambitious projects do not create any demand for cutting-edge technologies. On the other hand, they were not meant for this: The application of such sizeable budgetary fund can be compared only with the earnings received from Russian oil sales to other countries.

As a result, according to Anna Belova, Deputy General Director of SUEK, OJSC, business people realized that the main process in Russia is distribution rather than creation. She is sure that if the consciousness of the most active part of the population does not change in the foreseeable future, all ideas and resources will be useless in attempts to develop innovation-driven economy in the country. This economy will be of no need for anybody.

Vladimir Terletsky