Innovation for economic growth

Russia now accepts that IT is an important tool in the organisation of industry, and in order to become competitive, we need to rearrange our whole economic model. The way forward is to have an innovative economy, said Viktor Nikitin in an interview with the RBTH editor Irina Kozyreva.
RBTH Dossier
Professor Victor Nikitin is vice rector and dean of the College of Business Informatics at the State University-Higher School of Economics. Nikitin holds a PhD in cybernetics from the MIEM and has attended an MBA course at the European Institute of International Management in Geneva. He worked in the Moscow office of Microsoft (1993-2002). Areas of expertise are information systems and IT education standards.

Russia's need to shift to an innovative economy has been long talked of. Such discussions have extended far beyond the last 10 years of the country's rapid and intense economic growth. Recently, the Russian government has adopted a strategy for Russia's long-term development up until 2020. The essence and main idea of this programme is to make "development of the innovative economy in Russia the top-priority of its social and economic policy". According to the Russian Higher School of Economics, today the share of technologically advanced companies in Russia hovers between 10 or 11pc, compared to 25pc in the least developed countries of the EU and 50-70pc in leading Western European countries.

In the last 20 years we've to some extent lost our way in terms of maintaining the basic institutions for development: education and science. For this too there were both objective and subjective causes, including our focus on raw material exports.

The innovative model of the economy which today was adopted by the government, shows the way to future growth - a growth that will be based not on the raw material model, but high-technology industrial development.

For these reasons we will have to try to get ahead of the game and to adopt - or develop - our own model of a market that is integrated with the world economic scene.

What is the present state of the IT industry in Russia?

Recent years have seen very rapid growth in Russia's IT sector. This growth has been much more extensive and vigorous than in many of the world's established centres of IT power. Take, for example, the 25-30pc annual growth. The crisis is likely to slow this down. In the first instance, the fact is that this rapid growth was by no means always consistent with the real state of affairs. I'm referring to an IT infrastructure that was not sufficiently adapted to ensure appropriate trends. Second, despite massive state support, the growth in the IT sector was not accompanied by an adequate focus on the qualitative aspects of the process. Though IT began to be an independent and essential component in the process of industrial development, and as an essential tool, especially in hi-tech industry, a slump was inevitable.

On the other hand, the current crisis could have quite a positive influence on the future development of the sector. I mean, if in the past the use of this tool was not directly linked with increasing industrial efficiency, now that we have the crisis there will be a particular emphasis on this with regard to reducing costs. As a result, a focus on efficient decision-making both in specific industries and putting good industrial management processes in place.

We also mustn't overlook the fact that the Russian IT sector developed for the most part as a consumer sector. We were mainly engaged in exploiting solutions developed in other countries. The industry itself was oriented towards marketing ready-made products, while our own schools of developers were left on the sidelines - with some exceptions.

And yet the intellectual force of Russian developers of technical solutions at various levels and in various fields remains very high, though it is no secret that this intellectual force is rather specific in nature. In other words, our greatest success lies not in the field of mass production but in finding new ways of doing things.

Supporting the development needs some additional steps on different levels...

True. That's why in Russia we've again started paying attention to supporting educational and scientific research programmes. This is what is driving the trend to make fairly severe cuts in the number of institutes and universities where today more than 70pc of graduates are specialists in sales marketing and brand promotion.

The remaining 30pc we intend to use as the basis for strengthening the research laboratories which will be the incubators of ideas and technological developments. Naturally, we're not talking about giving up training marketing specialists, but we should follow other way.

And what could be the consequence?

This will undoubtedly lead to a certain realignment in the market: it will have to focus not just on import-export of ready-made goods, but also on needs of the domestic market as well as a model of production strategy, based on the advanced technologies.

I couldn't say that the Russian domestic market is ready for this, but there is no choice if we'd like to return to Russia the status of a technology hub. It is true for both state and private structures, because if supporting science and education is the state's task, the transition from the laboratory research stage to the stage of production is the task of business and industry. Lack of the highly qualified professional staff is the most important factor for reviving the industry. That's why today the accent is laid on creating a system of professional education, capable to fill the gap between science and industry.

What is the basis for developing such a strategy?

By studying the experience of both Russian and foreign companies - which in IT are giants such as Microsoft, Intel and others - we are trying to identify the balance point between maintaining the trend towards developing the market economy and the need to bring in some measures of state control. "The magic hand of the market" is still pretty much a modern myth, while 100pc state control is also not a panacea.

In this respect the model of economic development which China has managed to achieve is very interesting - and this experience is much more interesting for Russia today than the experience of the West. Nevertheless, Russia has always been between East and West, and that's why we are ready to learn the lessons of both. But we'll be going our own way.

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