ALACO DISPATCHES: Russian innovation stymied by brain drain

ALACO DISPATCHES: Russian innovation stymied by brain drain
Skolkovo is a failing project as funding dries up amid charges of mismanagement.
By Christopher Poulton of Alaco August 8, 2016

When Dmitry Medvedev became president in May 2008, his prime objective was the modernisation and diversification of Russia’s energy-dependent economy, then reeling from the effects of the global financial crisis. The country’s vulnerability to global shocks underlined the need to expand other areas of the economy, in particular the long-neglected technology and innovation sector.

Building on some initiatives begun under his predecessor Vladimir Putin, in September 2009 Medvedev set out his plan to overhaul the economy with the publication of an article entitled “Go Russia!” The plan to prepare the country for the 21st century covered five key areas: energy, nuclear power, IT, pharmaceuticals and telecommunications. Medvedev then began one of Russia’s most ambitious projects to date: the launch of its very own Silicon Valley – the Skolkovo Innovation Centre. It was hoped that by 2020 Skolkovo would act as an incubator for high-tech start-ups, providing a home to numerous domestic and foreign companies and workplaces for up to 50,000 scientists and researchers. 

While it drew significant international interest in the early 2010s, the initiative is now in steady decline. The economic slump, Russia’s overseas military adventures and Medvedev’s diminished influence after Putin’s return to the presidency in 2012 appear to have led to a drop in state funding for Skolkovo on which it depends. The project has also been plagued by claims of mismanagement and what some regard as politically motivated criminal investigations into Skolkovo executives. 

As interest in Skolkovo waned, in December 2014 President Putin launched the National Technology Initiative (NTI), a state-sponsored programme designed to strengthen Russia’s position in global technology markets by 2035, particularly in areas where it might have a competitive advantage over other global IT exporters, such as neurotechnology and quantum technology. 

For the NTI to be a success, it must foster human capital, but talented entrepreneurs and scientists – products of some of Russia’s top technical universities – are leaving in droves. The former feel unprotected in a country with high levels of corruption, weak rule of law and poor enforcement of intellectual property rights. The latter bemoan the lack of funding, low pay and a lack of prestige associated with a career in Russian science.

Not since the break-up of the Soviet Union has Russia seen such high numbers of its people moving abroad. After a steady fall in emigration in the 2000s, Russians are once more queuing for the door. Between 2008 and 2011, under President Medvedev, emigration never exceeded 40,000 per year, but in 2012, coinciding with the return of Putin, the figure more than doubled to over 100,000. This rise has continued unabated and last year reached 353,000. An exodus that was once largely confined to Russian intellectuals and academics now numbers many of the country’s best qualified specialists. 

Anecdotal evidence points to Russian start-ups looking to set up abroad in more welcoming environments, such as the Silicon Valley and other cities across Europe, including those that were once part of the Soviet Union. This trend has and will continue to harm Russia by undermining its own technological development and ambitions to compete globally. Yet politicians still seemingly fail to appreciate the urgency of the matter and demonstrate indifference to those who could help Russia achieve its aims.

Speaking at the St Petersburg International Economic Forum in June, MIT’s respected historian of Russian science Professor Loren Graham said that if the country is serious about retaining and capitalising on its talent pool, it should deal more with inherent problems that are hindering innovation rather than simply throwing money at big ideas and expecting them to work. In remarks that gained the endorsement of prominent Kremlin critics Mikhail Khodorkovsky and Alexey Navalny, Graham said Russia could only foster innovation by establishing a truly democratic form of government and an investor-friendly economy, where intellectual property is protected, corruption is controlled, and independent thought is encouraged.

That, however, looks to be a long way away. Under Putin’s increasingly authoritarian rule, there is very little prospect of the kind of reforms that would energise Russia’s would-be entrepreneurs and innovators. In the current climate, they will continue to head for countries where their skills and economic potential are in demand, leaving Russia lagging behind its global competitors and much the poorer for it.

Christopher Poulton is an Associate at Alaco. Alaco Dispatches is the business intelligence consultancy’s take on events and developments shaping the CIS region.