Russia told to innovate or be left behind

Feb 03, 2010 By NATALIYA VASILYEVA , AP Business Writer

(AP) -- Russia is 30 to 40 years behind developed economies in the technology sector and will lag further unless it innovates, Anatoly Chubais, the architect of the 1990s privatizations, warned Wednesday.

The former finance minister, who now runs the state-owned corporation for the development of the nascent high-tech sector, gave a sobering assessment of Russia's present and future.

"We have to admit: We have fallen very far behind," he said at a Moscow investment forum. "Not to understand this would be a very grave historic and political mistake."

To make up for Russia's slow development, the government must hammer out a long-term growth strategy and develop new technologies by investing abundant oil and gas revenues, Chubais said.

"We're now facing a dilemma that can be summed up as 'innovate or degrade.'"

Chubais oversaw the murky transition of property formerly belonging to the state to private hands after the Soviet collapse. He currently serves as director general of Rosnano, a state-run corporation which promotes and finances hi-tech projects created in 2007. Rosnano plans to invest some 310 billion rubles ($10.4 billion) in various domestic ventures this year.

Speaking more broadly on the Kremlin's initiative to modernize the economy, Chubais said the country had "excellent opportunities" to do this but admitted the path was not quite clear.

"Everyone talks about from morning till night," he said. "But no one's got a comprehensive and applicable solution so far. The main goal today is for the business and intellectual elites to work out this solution."

Chubais noted that most Russian hi-tech startups are few and unsuccessful because they lack financing and means to turn scientists' ideas into products.

Others at Wednesday's conference said the problem lies deeper - in Russia's lack of a qualified high-tech labor force and the absence of a productive and dynamic environment.

"One needs to think how to train better managers," said Elie Wurtman, an Israeli managing partner of the Benchmark Capital venture capital firm that counts social networking Web site Twitter and auction portal eBay among its investments.

The government needs to ask "how do you create an environment which is friendly to enterpreneurs, a tax regime which allows people to succeed and be motivated by their success?" he said.

Russia is facing its severest economic downturn in a decade as gross domestic product declined by 7.9 percent last year. While the country's currency and stock markets have stabilized, local companies still say that borrowing is expensive and largely unavailable.

Explore further: Microsoft CEO sees 'bold' plan as 4Q tops Street

5 /5 (5 votes)
add to favorites email to friend print save as pdf

Related Stories

Israeli, U.S. venture firms open joint lab

Mar 02, 2006

An Israeli venture-capital firm and a U.S. venture-capital company announced Wednesday they would join forces to invest millions in 10 new tech startups.

Russia, Indonesia Sign Satellite Launch Memorandum

Dec 16, 2005

Russia and Indonesia signed a memorandum Wednesday on the launch of a communications satellite at the end of the Russia Hi-Tech 2005 exposition in Malaysia's capital, reports RIA Novosti.

Report finds turnaround in tech industry

Apr 19, 2006

A new report found that 61,000 net jobs were added to the hi-tech industry for a total of 5.6 million tech jobs in 2005, indicating a turnaround in the industry, according to a trade association.

Russia predicts further telecom growth

Nov 11, 2005

Russia's telecom sector is expected to continue its steady growth relative to the country's GDP, Telecommunications Minister Leonid Reiman said Friday.

VC investments plunge 51 pct to $3.7 billion in 2Q

Jul 21, 2009

(AP) -- Venture capitalists cut their U.S. investments in half during the spring, the second-consecutive quarter to mark a more than 50 percent decline, leaving the money flowing to startups at the slowest trickle in 12 ...

Venture capital investments decline in 4th qtr

Jan 22, 2010

(AP) -- Venture capitalists invested less money in U.S. startups in the fourth quarter and showed signs of spreading out those fewer dollars among more companies, reflecting continued caution amid uncertainty about the economy.

Recommended for you

Cheaper wireless plans cut into AT&T 2Q profit

8 minutes ago

(AP)—AT&T posted lower net income for the latest quarter due to cheaper cellphone plans it introduced as a response to aggressive pricing from smaller competitor T-Mobile US.

Facebook shares profit growth story

13 minutes ago

Facebook on Wednesday reported that is quarterly profit more than doubled amid big gains in ad revenues and a jump in users.

Android grabs more tablet market share

2 hours ago

Global sales of tablet computers edged higher in the second quarter, in the slowest growth since 2009, research firm Strategy Analytics said Wednesday.

Microsoft CEO sees 'bold' plan as 4Q tops Street

13 hours ago

(AP)—Microsoft Corp. CEO Satya Nadella painted an upbeat vision of the future Tuesday, saying that the next version of Windows will be unified across screens of all sizes and that two money-losing units—Nokia ...

Apple's fiscal 3Q earnings top analyst forecasts

Jul 22, 2014

Apple's growth prospects are looking brighter as anticipation builds for the upcoming release of the next iPhone, a model that is expected to cater to consumers yearning for a bigger screen.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

Richardhg
4 / 5 (1) Feb 04, 2010
Russia is missing lean and mean administration and planning expertise. There are some fabulous scientists there, but they are as dumb as bricks when it comes to business management. Accordingly, let them run a company, and they think the priority is in the lab, not in the marketplace.

Until Russia does something to become market-driven, they will continue to have great technology and none of the follow-on business that proper implementation of tech-to-market would bring.