№10 INNOVATION TRENDS 31.08.11 Newsletter of Institute for Public Planning The materials published in the Newsletter are being a part of a research on national innovation systems There Are Hundreds of Companies that are Capable of Making a Leap – p.13 There is no Such a Thing as a Single Unique National Innovation System for the Whole World – p.15 «President Medvedev Understands the Importance of Rules» – p.61 MAIN SUBJECT THE BEST OF 2010-2011 Innovation Approach Needed to Create Unconventional Institutions mechanism for generating and implementing innovations from fundamental research to commercialization and to retailing. It drains brains from all over the world, enticing researchers with high compensation packages and comfortable working and living conditions. Using venture funds and a well-oiled stock market, it skims the best projects. They know how to commercialize the products and solutions developed. The USA supplies innovations to the world at large, and the world pays for their development by putting its savings in dollars. This is an example of the best innovation-oriented policy. Economic-miracle countries, such as Japan, South Korea, Taiwan, as well as Finland and a number of other economies, use sophisticated innovative strategies. To begin with, they imported foreign-made machine tools and equipment, then they bought patents, set up their manufacturing facilities, and forced out imports. After that they committed to exporting, gradually upgrading their products and switching over to high technologies. And only then they did opt for innovative growth. These nations provide examples of successful innovation policies. But thereу are many more nations that have failed. Viktor Polterovich — RAS Academician, Member of Executive Committee of the Why? International Economic Association, Chief Editor They failed to follow the correct sequence of switching. A case in point is Brazil, which is not the most backward nation of the Journal of New Economic Association in Latin America, not by a long shot. Brazil is growing at a fairly good rate. But there has been no leap forward in Brazil, as there was in Japan, as there was in Taiwan and South Korea, What do you think are the most and least successful because it has failed to come up with the correct strategy. examples of innovation-oriented policies in the world? It must be emphasized here that a successful strategy at The term “innovation” has many meanings; it needs to be each stage of development has both distinctive macro-political clarified. The Federal State Statistics Service differentiates features and specific methods of government intervention. For between advanced production technologies that are new for example, small businesses play an important role at the stage Russia and those that are totally new. Totally new means of innovation-driven growth, typical of advanced nations. And ones that have been developed for the first time and have no major corporations are much better at arranging borrowing. substitutes anywhere in the world. And new technologies for Sometimes we hear even from, one would think, the Russia mean ones that have been essentially borrowed from authoritative lips of spokespersons for the World Bank that other nations. In 2007, Russia borrowed for the first time 653 all Russia’s troubles come from the insufficient number of advanced technologies, and developed a mere 75 totally new small and medium-sized businesses in Russia. But history ones. and theory provide evidence to the contrary. To be sure, we If your objective is not to amaze the world but to improve need to support small businesses. But we should not expect performance and therefore living standards, you can opt them to become major drivers of economic growth at this for borrowing rather than developing new technologies. juncture. At the stage we are at this role must be played by Moreover, if a country lags behind in technology, it usually major economic players. finds it much cheaper to borrow. Advanced nations, on the other hand, are limited in their choices of borrowing; they are What are the latest changes in innovation policies in the forced to develop totally new solutions. world? The most successful among such nations is naturally As a crisis management measure, developed countries the USA. The Americans have developed an effective have increased expenditure on fundamental research. page 2 First of all, they have increased a platform for rapid growth of advanced INNONEWS expenditure on the development of economies. In the final analysis, this is nanotechnology and energy-saving. what triggered the crisis, which actually As early as 2000, by way of response started not in 2007–2008 but as early V Nano & Giga Forum to the crash in the market for securities as 2000, when a crisis occurred in the of high-tech companies, the USA hi-tech market. V Nano & Giga Forum will bring launched its National Nanotechnology The Western nations seem to together international leaders and young Initiative. The President has a National understand this. Maybe this hasn’t talents doing research in nanoelectronics, Nanotechnology Coordination been made explicit in so many photonics and alternative energy. The Office. In the European Union, words, but they are doing exactly Forum will take place in Zelenograd nanotechnologies take a place of what needs to be done. They are (Moscow region) September 12–16, 2011. prominence in the EU’s [Seventh] investing in new technologies, first The event is organized by Moscow Framework Programme for Research of all in nanotechnology. It looks State University and NT-MDT — leader in and Technological Development. But like nanotechnology is precisely the nanotechnology instrumentation, and will developing economies should have future technology of wide application. include tutorial lectures (Summer School), a different strategy. The global crisis Experts say it will take quite some time scientific symposium, exhibition and is creating good conditions for import for them to fuel new growth — up to ten satellite workshops on nanotechnology substitution and acquisition of marked- years. So we shouldn’t expect Western innovations, instrumentation and down solutions, for recruitment of economies to grow at their former standardization. The conference experts who now find it more difficult to rates in the nearest future. More or organizers have made agreements with get jobs in their home countries. China less a similar situation prevailed after Springer and the Institute of Physics is very active in this respect. the 1930s crisis, with the aftermath of Publishing for publication of the papers the crisis casting its shadow over an from the NGC2011 meeting in a tutorial And does Russia have an innovation entire decade. And after the war the book and special issues of two high ranking system, and what are its distinctive era of new technologies began, and international journals, Nanotechnology features? eventually they pushed the Western (IoP) and Nanoscale Research Letters Of course it has. We have been very economy to a new level. (Springer). busy these last ten years in setting Russia must find an institutional www.asdn.net it up. And it is in a very sorry state structure that would enable effective because it was built without rhyme or borrowing and a gradual transition reason. It is a hotchpotch of various to innovative growth. In my recent VIRIAL Launches First Production institutions set up by blind copying of articles I have attempted to outline Line for Nanostructured Ceramic and Western ones. such a structure. It is based on Cerametallic Goods It’s a catch–22: we copy institutions the experience of the economic- in hope of acquiring an innovation miracle countries and factors in the August 19, 2011 ceremonies were held mechanism. But what we need is development mechanisms that have in St. Petersburg for the first production line exactly an innovation approach to emerged relatively recently. Its further for new high-tech goods of nanostructured form unconventional institutions to elaboration is the subject matter of ceramic and cerametallic materials. The ensure effective borrowing. Borrowing a multi-author book which I have facilities belong to VIRIAL, a project is far from simple. Had it been simple, edited, which is scheduled to appear company created with co-investment from there would have been no developing in September. It is called “A Strategy RUSNANO. countries left by now: they would all for Modernization of the Russian The total cost of the new project is 1.7 have become developed. Economy”. billion rubles. Investment fund CapMan, The keynote of the proposed a leading fund in direct financing in What research and development strategy is as follows. In order for Scandinavian countries and Russia, and areas do you see as enabling a leap Russia to join within the next 20 years agriculture innovator Siberian Organics forward? Which ones can be expected the group of developed economies have joined RUSNANO as co-investors. to deliver the next technological (in terms of per-capita GDP, this With the commissioning of VIRIAL’s breakthrough? After all, many believe means at least 50% of the US level), new plant, the company will be able to that one of the causes of the crisis is it needs a system of interactive growth boost output to 1.2 million ready-made the end of the previous technological management. Its major components items in 2011, an increase of 0.25 million. cycle. are a system of regional agencies Greater production and broader product INNOVATION TRENDS INNOVATION I do believe that new technologies for interactive planning headed by a offerings will drive company sales to 720 must come into being: ones of wide federal agency; a national innovation million rubles this year, 20 percent above application, i.e., technologies that system, geared up for borrowing with earnings in 2010. can be integrated into a wide range a gradual shift towards innovation; www.rusnano.com of industrial applications, becoming and macroeconomic and foreign-trade a driver of economic growth.