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Leonid Gokhberg: “Innovation Policy Must Become the Core of the National Socio-Economic Policy”

On 2 April, 2014 the RF prime minister Dmitry Medvedev visited the Higher School of Economics, to discuss with the participants of the XV April International Academic Conference on Economic and Social Development the steps the government should be taking to support innovation and social policy in the new context. Leonid Gokhberg, first vice-rector and director of the NRU HSE Institute for Statistical Studies and Economics of Knowledge, contributed to the discussion. Here’s a transcript of his comments.


Video from HSE website

Extensive Development Has Exhausted Its Potential

Dear Dmitry Anatolyevich, dear colleagues, I’d like to add a few words about innovation policy.

Obviously the current economic situation, especially taken together with the foreign policy factors you’ve mentioned, shows that the extensive development stage as such has practically exhausted its potential. And, despite the existing documents, performing a structural manoeuvre to move on to adopt the innovation-based economic development model becomes the real objective in Russia. Indeed, innovation-based modernisation processes were very much in place during the recent years: a line of development institutes have been created, a number of strategic documents approved. Still, in our view they lack adequate dynamism and scale.

For example, the share of Russian industrial companies engaged in technological innovations for several years remained under 10% - which is five or six times lower than in leading OECD countries.

Of course if you also consider the high rate of technology-related changes currently taking place on the global arena, it would only accentuate the challenges and risks the Russian economy is facing. Therefore in my opinion, innovation policy should become the core of the national socio-economic policy. We must find answers to these challenges and risks quickly, and I believe the answers should be asymmetrical. Clearly it’s a very difficult, complex task, so I will speak in more detail only about one aspect: the issue of priorities, thematic, institutional, and geographic ones.

Resources Should Be Concentrated in Priority Areas

First of all, the problem is that in most cases, our federal, regional, and corporate strategies lack long-term vision. For example, take the energy sector’s development prospects: the rest of the world is thinking in 2050 terms. There are numerous other sectors, including high-technology ones, where e.g. national or federal targeted programmes are designed for five to seven years; clearly it would be impossible to achieve any serious technological changes during that time, i.e. their outcome is pre-determined. This means we really must move on and adopt long-term vision, to concentrate resources in high-priority areas associated with new emerging markets, where we can expect high sustainable growth and which still have entry opportunities.

For example, there’s a sector with practically no Russian-language literature about it: biomimcry industry. According to a number of Foresight studies, by 2025 the total added value generated in this sector globally would amount to approximately one trillion US dollars, and the number of jobs in the US alone would exceed 1.5 million. In other words, it’s a huge industry, and we in Russia have certain applicable S&T results. We mustn’t lose these opportunities.

Another obvious priority, in our opinion, is technological upgrading of the basic infrastructure. I mean such technologies as smart cities, energy grids which would allow to save 20-30% of electricity without the need to increase its production. It’s data centres, new transport vehicles.

There Should Be Ongoing, Systemic Technology Foresight

In January of this year you’ve approved the Russian S&T Foresight towards 2030. The Higher School of Economics was one of the main developers of this document; it identifies, based on analysis of global innovation markets’ development trends, more than 250 market segments and more than 1,000 S&T areas where Russia can become globally competitive, and which could serve as practical milestones for the government, development institutes, companies, and the R&D sphere.

Technology foresight system is currently being developed, coordinated by an Inter-Departmental Commission at the Council for Economic Modernisation. In our opinion, this activity should be ongoing and systemic. Its results should be implemented to adjust government programmes, companies’ innovation-based development strategies, to identify promising technology development projects in the framework of major investment initiatives. We’ve already achieved certain results in this area. E.g. jointly with the Ministry of Industry and Trade we’ve conducted a long-term Foresight study for shipbuilding industry. Similar projects were implemented jointly with companies, such as Gazpromneft, Aeroflot, and many others.

Government Funding of the R&D Sphere Must Not Be Cut, but Institutional Reforms Are Needed

Another thing. Just a few short words about institutional priorities. In our opinion, moving on to a new technology development level would certainly be impossible if government R&D funding of  was cut. Of course there’re serious complaints about productivity and quality of research, competitiveness, and so on. But in such circumstances, increased public funding must be accompanied by structural institutional reforms, and introduction of stricter requirements to productivity of research. Note that this applies not just to basic, but of course to applied research too. Also, we must provide better incentives to business to invest in R&D and innovation activities, because the current ones don’t work very well yet.

Speaking about basic research, a major issue here is concentrating resources on supporting the leaders in the research and education sphere; adopting the centres of excellence model, because we simply cannot afford to spread the available resources thin any more. Certainly we must continue to support cooperation programmes between universities and companies, and programmes aimed at hiring leading international scientists. Unfortunately, as Yaroslav Ivanovich mentioned, some of these tools are frequently applied, so to say, “discretely”: we invest serious resources and then cut the funding off, before the system has gained momentum to reproduce the results on its own.

As to applied research, we clearly need to reformat the funding system. The government’s participation must be limited to co-funding research in areas which are interesting to companies, and only in sectors where there’re real prospects to achieve global competitiveness.

There’s Potential to Establish New Global R&D Alliances

And the last thing: new global alliances. Here we believe we have a very significant unrealised potential, because all international cooperation in this sphere — well, almost all — was concentrated in a particular segment of countries with whom we are now starting to have these problems. And we have certain prospects, [for example] to develop in Russia complementary technological areas in line with technology profiles of relevant emerging countries, all the way to developing technology transfer and localisation mechanisms on their territories. This would definitely require a systemic effort to analyse emerging countries’ technology profiles, but unfortunately we haven’t yet started such work. Thank you.