Modernizing Russia Through Innovation

The necessity for a radical change in Russia's economic development paradigm has become clear in recent years, with President Medvedev responding forcibly.
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The necessity for a radical change in Russia's economic development paradigm has become clear in recent years. President Medvedev has responded by formulating principles of innovative economic development and outlining the industrial priorities of the state. However, the success of Russia's effort to modernize depends on real cooperation between government and society in taking concrete actions that can facilitate technological breakthrough.

For the first time in recent history, Russia is making a serious attempt to drop the use of invocations and declarations while speaking about the innovative renewal of the Russian economy, and instead acting pragmatically by formulating both a plan of priorities and the basics of long-term policy. Russia's modernization plan has two major components: a) seeding innovation and technological breakthroughs inside the country and b) importing technology and equipment more efficiently for use in the real sector of the economy.

Both components are necessary.

The technological breakthrough project is a major initiative of our current national leadership. As with any venture, it faces challenges and has skeptics. However the project did not emerge from scratch, and is not an ideological green field. By 2009, Russia had formed a clear and strictly defined path for modernization, which called for further actions by leaders in all sectors, such as the creation of a presidential commission and the expression of ideas that were directly reflected in both President Medvedev's "Forward, Russia" article and in his latest annual address.

These ideas include the state strictly defining its mandate in this component by listing priority industries in which it will promote accelerated development: energy efficiency and new fuels; medical technologies and pharmaceuticals; nuclear power-engineering; information technologies; and space and telecommunications. We will focus largely on these industries, as they most clearly provide for the transition from aspirations to achievements in concrete projects and scalable technology.

As to the second component of Russia's modernization efforts, the growth of imported technologies was inevitable in recent years as it was an investment priority for major domestic companies. In the absence of a fully developed national innovation infrastructure, any other policy could lead to complete technological and industrial isolation and, as a result, to economic degradation. However, it is now necessary to move from innovation imports to domestic production, and to develop Russia not only into a sales market for technologies, but into a home of worthy global high-tech suppliers.

Naturally, the modernization of the country cannot be limited by those two components. The success of the project will depend on engaging the leaders of all parts of Russian society in the process of developing innovative changes. That means that meaningful cooperation between the state and business and society is very important. That in turn requires an open, honest and ongoing dialogue between government leaders and the private sector to develop a plan of joint actions.

A year after we drafted the government's anti-crisis plan, and after implementing much of that plan, our macroeconomic indicators provide reason for cautious optimism. Now is the time to design an innovative breakthrough.

There are five major topics that Russian government and political leaders must consider that should help us achieve the modernization we aim for:

  • Who will implement modernization? Which steps shall be made to develop human capital in the areas of scientific research, education and health care?
  • Is the business community ready for a new expansion in quality? Corporate investment programs continue to mainly reflect the task of local technical re-equipment or "weak" modernization based on borrowed technologies. Which innovation stimuli can be efficient, actual and feasible? What is the acceptable level of risk that can be borne by the state?
  • How can we raise the quality of the institutional environment for modernization? How do we assess existing mandates of development institutions and build a system of "innovation elevators" for projects? Where is it necessary and possible to secure risky venture investments?
  • How shall we provide a comfortable environment, without which it is absolutely impossible to facilitate creative and innovative thinking? What shall make our cities, housing and communal infrastructure, social and household services attractive and competitive?
  • How shall we take advantage of the dynamic development of Southeast and Central Asian economies, and at the same time transfer these trends to Siberia and the Far East?

The more we consider these topics in light of the government's program, the more likely we'll be able to succeed in taking concrete steps toward building a Russian economy for the 21st century.

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