From Phileas Fogg to Yuri Gagarin:...

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Marilyn Flynn
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1 From Phileas Fogg to Yuri Gagarin:... Prologue: Has the world grown smaller? Certainly, returned Ralph. I agree with Mr. Fogg. The world has grown smaller, since a man can now go round it ten times more quickly than a hundred years ago. You have a strange way, Ralph, of proving that the world has grown smaller. So, because you can go round it in three months. In eighty days, interrupted Phileas Fogg. It's absurd! cried Stuart, who was beginning to be annoyed at the persistency of his friend. Jules Verne, Around the World in Eighty Days, 1873 Kari Liuhto , Moscow

Russia s modernisation path(s) Russia in the 1970-1990s: Russia s industrial

2 Russia s modernisation path(s) Russia in the s: Russia s industrial competitiveness deteriorates Russia in this millenium: How to turn Russia more innovative? Russia tomorrow: two major paths in modernisation State-led, militaryoriented reform vs? Private firm dominated, civil societyoriented reform

3 Modernisation is not self-evident path for Russia, though it would be highly needed Source: Liuhto 2009

4 Russia s innovation / R&D activity today (1) Figure 1 Expenditure on R&D Gross expenditure on R&D as share of GDP in 2007, % High Low Gross expenditure on R&D as share of GDP in 2007 and relative change in , percentage points (circle size corresponds to total GERD, USD mln.) 4% 3% 2% 1% 0% France Ukraine Poland Kazakhstan USA Russia India Chile Japan Hungary Belarus Germany Canada Turkey Finland Czech Rep. Estonia South Africa China South Korea Israel -0, 0,0% 0, 1,0% 1, 2,0% Change of the share of GERD in GDP between 1997 and 2007, percentage points Low High Country s share (%) of world s GERD in 2007 USA Japan Germany France China South Korea Russia India Finland Israel Turkey South Africa Change of the country s share in world s GERD between 1997 and 2007 China Turkey South Africa Israel South Korea Finland Japan India Germany Russia USA France 14,04% 7,88% 5,06% 4,43% 3,13% 1,3 0,88% 0,79% 0,72% 0,43% 0,2 - -9% -16% 40% 38% 23% 13% 1% 0% 79% 34,13% 0% 10% 20% 30% 40% 103% Source: UNESCO Institute for Statistics, World Bank -40% 0% 40% 80% 120% Source: Prazdnichnykh & Liuhto, PEI 2010

5 Russia s innovation / R&D activity today (2)

6 Russia s innovation / R&D activity today (3)

7 Russia s innovation / R&D activity today (4) Companies in Fortune Global 500 Companies in top 1,000 R&D investors Brazil Russia India China Europe * USA * Europe excluding Russia Sources: DIUS (2009); Fortune (2009)

8 Russia s innovation / R&D activity today (5) Figure 4 Sample characteristics (innovation), % Presence of R&D department Main sources of innovation The company doesn t have R&D department, 49% Company's own R&D department Foreign companies - suppliers of equipment or parts 38 % * 47 % Presence of innovation strategy The company has an R&D department, 51% Russian companies - suppliers of equipment or parts Company's own departments, except R&D Russian engineering, design and other specialized companies Russian institution of science and technology or university 28 % 25 % 16 % 15 % The company doesn't have В компании innovation нет strategy, исследовательского 24% подразделения, 49% Innovation strategy exists only in top managers' minds, 51% Documented as a separate strategy, Documented as a part of overall strategy, 20% В компании существует исследовательское подразделение, 51% Foreign engineering, design and other specialized companies Acquisition of patents, licenses and know-how from Russian companies Acquisition of patents, licenses and know-how from foreign companies (with or without Russian presence) Foreign institution of science and technology or university 5 % 3 % 8 % 6 % 0 % 10 % 20 % 30 % 40 % 50 % 60 % * The sum exceeds 100%, since up to three options were allowed Source: Bauman Innovation and OPORA Russian Innovation Survey Source: Prazdnichnykh & Liuhto, PEI 2010

9 Russia s innovation / R&D activity today (6) Figure 6 Obstacles to innovation Main obstacles to innovation activities for mid-sized and large companies in Russia Lack of funds available within the company Too large cost of innovation activity Difficult to get external financing Uncertainty of demand for a new product or service Lack of qualified human resources Lack of technology information Lack of market information Difficult to find suppliers Restricting standards and industry regulations No demand for new products and services Ineffective innovation management Board of Directors doesn't recognize innovation as priority 6% 6% 4% 8% 12% 23% 19% 33% 33% 62% * 0% 10% 20% 30% 40% 50% 60% 70% * The sum exceeds 100%, since up to three options were allowed Rankings of obstacles to innovation for EU- companies Innovative companies* Lack of funds available within the company Difficult to get external financing Uncertainty of demand for a new product or service Difficult to find suppliers Too large cost of innovation activity Lack of qualified human resources No demand for new products and services Restricting standards and industry regulations Lack of market information Lack of technology information * See Community Innovation Survey for explanations Non-innovative companies* No demand for new products and services Lack of funds available within the company Difficult to get external financing Difficult to find suppliers Uncertainty of demand for a new product or service Too large cost of innovation activity Restricting standards and industry regulations Lack of qualified human resources Lack of technology information Lack of market information Source: Prazdnichnykh & Liuhto, PEI 2010 Source: Bauman Innovation and OPORA Russian Innovation Survey ; Community Innovation Survey , Central Statistics Office

10 Russia s innovation / R&D activity today (7) Figure 7 Barriers to innovation: human resources and education Availability of engineers and technicians Low 8% 21% 23% 17% 10% 3% High Cost to hire engineers and technicians 2% 8% 12% Too high, inacceptable 32% 20% 14% 13% Acceptable Education quality in vocational schools and technical colleges 8% Low 17% 26% 2 16% 6% 2% High Quality of higher education in natural sciences and engineering 4% Low 13% 24% 19% 4% High Quality of math and science education in school 6% Low 11% 14% 24% 23% High Source: Prazdnichnykh & Liuhto, PEI 2010 Source: Bauman Innovation and OPORA Russian Innovation Survey

11 Russia s innovation / R&D activity today (8) Figure 8 Intellectual property protection Intellectual property protection in general Weak 31% 24% 14% 14% 10% 4% 3% Strong Intellectual property protection: patents for invention and prototypes Weak 21% 1 24% 13% 7% 3% Strong Intellectual property protection: registered trademarks 8% Weak 10% 16% 22% 7% Strong Intellectual property protection: authors rights Weak 13% 19% 27% 12% 10% 2% Strong Intellectual property protection: business secrets and know-how Weak 12% 11% 27% 13% 13% 4% Strong Source: Prazdnichnykh & Liuhto, PEI 2010 Source: Bauman Innovation and OPORA Russian Innovation Survey

12 Russia s innovation / R&D activity today (9) Figure 10 Finland is R&D superpower in industrial cooperation with Russia Cooperation with foreign companies in area of technology and innovation Technological cooperation with partners abroad (during last three years) Areas of cooperation Location of main technology partners Upgrading products and services 53% * 23% 16% 36% Germany ** USA China No 49% Yes 48% Developing new products and services Designing and implementing new production processes 43% 42% CIS countries Finland Italy Japan France India 10% 9% 8% 8% Upgrading production processes 42% Sweden Other Europe Other non-europe 14% * The sum exceeds 100%, since multiple options were allowed ** The sum exceeds 100%, since up to two options were allowed Source: Prazdnichnykh & Liuhto, PEI 2010 Source: Bauman Innovation and OPORA Russian Innovation Survey

13 Finnish-Russian innovation cooperation: Some examples INTER-ENTERPRISE JOINT INNOVATION ACTIVITY * Flagship: Nokia in Skolkovo INNOVATION FINANCE * TEKES-FASIE * Rusnano-Finnish Industry Investment Ltd NETWORKING * FinNode Russia (match making) * Technopolis (technopark) * Finnish-Russian Innovation Centre (regional cooperation) PR- ACTIVITIES * EU-Russia Innovation Forum (mainly bilateral annual event - third time in June 2011) JOINT RESEARCH * Academy of Finland and the Russian Foundation for Humanities ( ) * Various universities and their Russia-units EXCHANGE OF RESEARCHERS * Various universities

14 Some policy considerations based on Finnish-Russian cooperation (1) (1) Establish a Joint EU-Russia Innovation Centre both in Russia and in the EU. (2) Support the internationalization of innovations. (3) Turn the innovations conducted in the military sector into civilian use. (4) Improve intellectual property rights (IPR) and the investment climate. (5) Institutional innovations are needed. (6) Design a service innovation policy.

15 Some policy considerations based on Finnish-Russian cooperation (2) ( 7) Enhance management innovations. ( 8) Create innovation competition. ( 9) Establish innovation journalism to share best practices. (10) Do not concentrate on radical innovations. (11) Teach creativity and entrepreneurship in universities. (12) Avoid political stagnation.

16 From Phileas Fogg to Yuri Gagarin but what after Gagarin? Epilogue: 50 years ago, the Soviet cosmonaut, Yuri Gagarin, flew around the world in less than two hours. Lesson: reaching the impossible is possible but it takes time and requires foreign cooperation / competition.

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