Russian officials vote against innovations with their feet

20.03.2012 — Analysis

The Russian government intends to turn to innovation clusters to upgrade the economy. In April 2012 the government will select the regions where it, together with business people and scientists, will make an attempt to build research and production agglomerations. Experts take these plans with a grain of salt: The country has no large innovative projects, as no one generates them and no one consumes them. The excessively monopolized business does not need any future-targeted projects, and the government does not stimulate demand for innovations. Officials were very eloquent in demonstrating their attitude to modernization by turning their deaf ear to the Ekaterinburg-hosted RUS-INNO-BUSINESS-2012 Forum visited by the RusBusinessNews columnist.

Russian president Dmitry Medvedev requested the governors to outline the main areas of economic modernization, taking into account development strategies adopted by the largest companies located in their regions. At the moment, the federal government is discussing principles underlying the establishment of territorial clusters driven by large-scale industrial projects. The latter will receive their "fuel" from the research and educational resources that will be formed and motivated by regional governments.

Experts tend to be quite conservative in their opinion about the initiative of the federal center: Despite the increasing number of support institutions, science-driven business has not demonstrated any vigorous growth so far. Officials believe that the problem can be solved through small enterprises that should be increased in number and given long-term loans, as they will be much quicker than large companies in purchasing innovations. However, the reality is different: Vladimir Baskov, the deputy general director of the Russian Energy Agency, a federal state budget institution, reported at the RUS-INNO-BUSINESS-2012 Investment Forum that regions do not have any relevant projects, thus causing reduction in innovation-targeted financing. In 2011 the RF Ministry of Education and Science returned 1.5 billion rubles earmarked for innovative research projects to the budget. Other ministries are also unable to use the funds allocated for innovations.

According to Alexei Sannikov, the chairman of the Tyumen Regional Committee for Innovations, today's business is not ready to consume future-targeted innovations. For example, developers who sell successfully apartments at the price exceeding their cost two times are not interested in 3% savings that can be achieved through new technologies. The same considerations are typical of oil companies. Therefore, the government is the only consumer that is interested in intellectual products: A. Sannikov thinks that innovations are most unlikely to be deployed in industry without state orders. However, for some reason, officials do their job dreadfully.

Andrei Misyura, an adviser to the general director of the NPO Avtomatiki (Automation Scientific and Production Association), a federal state unitary enterprise, states that the Sverdlovsk regional authorities do not order advanced systems intended to save energy used in the housing and public utility sector. Municipal authorities even raise difficulties in investment in regional energy efficiency. Under the existing laws, instead of working directly with the municipality, innovators must sign a contract with the management company (MC) specified by the city mayor. In most cases this company is affiliated with the city administrator - therefore, after his/her resignation it goes bankrupt and a new company is launched to support a new mayor. As each head of a municipal entity watches over his/her own interests rather than interests of the city under his/her administration, according to A. Misyura, innovative companies may fail to return their investment in promising high-tech projects as such projects are not in demand.

Infrastructure development has been also neglected by the authorities. The Ekaterinburg-based NPO Avtomatiki is willing to build an industrial park, but cannot persuade the officials to go ahead with the program for development of the innovative zone. The officials refer to the lack of money - the standard technological park will cost at least 3 billion rubles. However, the entrepreneurs do not see this explanation as satisfactory: According to them, money is not the only and the principal issue. For example, the process of rezoning of forest lands into urban lands that can be used for development of a technological park will take 6-7 years. The government does nothing to rectify red tape formalities.

This situation is observed not only in the Sverdlovsk Region, but also in other regions of Russia. According to Sergey Tolchin, the head of the Novy Zvezdny Technopolis Project, the Proton-PM Company, OJSC, is ready to develop an industrial park through its own efforts. However, the entrepreneurs want to know whether the project will be interesting to the Perm regional government authorities and whether the authorities are going to grant any benefits to the residents of the special economic zone. However, they may wait for the answer for years.

The lack of efficient support of innovative business generates the deficit of promising large-scale projects. Andrei Misyura states that Russian scientists deal with the situations when they have to look for money instead of doing research. Small businesses do not create intellectual property - at their best, they can do research and development or, in other words, adapt a scientific invention to industrial needs. Consequently, they are not able to work without cooperation with a scientific institution - an academic institution or a university. However, the Russian Academy of Sciences (RAS) is not involved in innovations, as, according to Nikolay Mushnikov, the deputy chairperson of the RAS Ural Department, the government does not support such projects with money. Yuri Kononov, the director of the Uralsky Technopark Autonomous Non-Profit Organization, says that some buoyancy can be observed in educational institutions, though they have no matured intellectual resources to rely on.

By and large, institutions of higher educational also do not have time for science - they have to commercialize the innovations they already have. For example, the Ural Federal University, says its vice-rector Sergey Kortov, must reach the output of innovative products in the amount of 500 million rubles by 2015 and 1 billion rubles - by 2020. For reference: In 2010 the university's innovations accounted for... only 14 million rubles. Facing the task to boost up its innovative activity, the Ural Federal University has to increase fast and substantially the number of small businesses. It is going to come across many pitfalls in this attempt.

Nikolay Mushnikov states that though the federal government issued an ordinance permitting scientific and educational institutions to set up business enterprises, there are still no results. There are several reasons for this: the regulatory document is not perfect, the assessment is difficult, the transfer of intellectual property is problematic, etc. The most discouraging for small businesses are inspections of supervisory authorities, which make every effort to prevent budget money from flowing to for-profit entities.

The occurring conflicts and difficulties impede the process of innovative infrastructure development. With reference to the data of Michal Svantner, the director of the Division for Certain Countries in Europe and Asia, World Intellectual Property Organization (WIPO), the number of Russian intermediary entities dealing with technology transfer is substantially smaller than in industrialized countries. The level of economic development that is essential for deployment of innovations is also much lower.

A. Misyura thinks that, in terms of science, Russia lags at least eight years behind the leading countries. However, the government authorities are not concerned about this fact: The Sverdlovsk officials were tight-knit in ignoring the RUS-INNO-BUSINESS-2012 Investment Forum. In V. Baskov's opinion, they should have listened to experts: there is no one to discuss innovations at public institutions.

Vladimir Terletsky