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#12 - JRL 7135
St Petersburg Times
April 8, 2003
Nothing New Identified in Innovation
By Katherine Ters

Russia may have some of the world's most talented scientists and top research institutes, but that doesn't mean it has a hi-tech economy. In fact, according to participants at a top-level British-Russian seminar held on Thursday, the county is not using its scientific resources to their full potential.

"Russia can't yet be called a hi-tech country," said Mikhail Kovalchuk, executive secretary of the Presidental Science and Technology Committee. "Russia is a raw-materials country; it gets more than 40 percent of its GDP from raw materials, even though we have 12 percent of the world's scientific potential concentrated here."

The seminar, "Britain and Russia: Developing a Science-Based Economy," was organized jointly by the British Council and the Northwest Center for Strategic Research, a public strategic-planning institute, as part of British Science Week, itself part of UK@SPb, a British government-funded program for St. Petersburg's 300th-anniversary celebrations.

The seminar, which included a round table and presentations by British and Russian government officials and advisors, focused on innovation and its role in economic development. Also taking part were the heads of St. Petersburg scientific institutions and representatives from science-and-technology committees and research centers from across the Northwest Region.

The U.K. government's chief scientific advisor, David King, outlined the British experience of moving from a manufacturing-based to a hi-tech economy, stressing the importance of fusing academic research and business and, in particular, the need to create mechanisms to facilitate knowledge transfer between the two.

"This is the key to finding funding for science, and for keeping businesses globally competitive," he said.

In Britian, King said, a new company is created for every $19 billion invested in research. The figure for the United States is one company for every $72 billion invested.

Investing in academic research also brings benefits for the scientists involved, King said. He recalled looking out of his window in Cambridge a few years ago and seeing rusty, aging cars belonging to his fellow academics in the parking lot below.

"Now, if you look in the same car park, there are a number of Porches and Mercedes," he said. "Out of the 50 academics in our faculty, six are millionaires as a result of their spin-out activities."

"In the past, when academics came across something new, they would think about publishing an article; now, they think about setting up a company," he said. "Spin-out activities have become a part of what academics in Britain do now."

Participants in the round table discussed the problem of Russia's brain drain, the difficulty of finding loans to cover international patent costs and the lack of information and support for scientists with start-up projects and inventions. Many participants complained about current public funding levels for science.

"The creation of a silicon valley in Russia is not possible despite our scientific potential," said Vladimir Troyan, the vice rector of research at St. Petersburg State University. "Current funding levels do not adequately support Russia's scientific potential."

Russia's scientific resources are large, with more than 4,000 research institutes employing over 800,000 researchers, but underfunded. Russian scientists are well known for their prowess in pure physics and math, but are increasingly gaining recognition for software development, nanotechnology, biotechnology, lasers, materials development and optoelectronics. Software and biotech outsourcing sectors are growing particularly fast.

"Foreign investors come to Russia and make fat profits from our scientific resources," Troyan continued. "Russians are not getting as much as they could be from these activities."

Despite giving an exhausting description of the history of science in Russia, Kovalchuk failed to address the question of the day: What is the Russian government doing to stimulate an innovation-based economy?

Kovalchuk said that the government believed it should take care of the generic situation, rather than picking particular technologies or scientific projects to support. However, he sidestepped questions about funding, and failed to mention any government programs that really assisted scientists commercialize their discoveries.

First Deputy Science Minister Andrei Fursenko said that the government was well aware of the need to support science, but suggested funding increases were unlikely.

"Science was never perceived as part of the market in the past. We need to change this attitude and make it more marketable," he said. "Our scientific institutions from Soviet times are important resources, but you all need to be aware, that the government only has a finite amount of resources and that is not going to change."

Round-table participants also talked about the difficulties of attracting venture capital.

"Investment capital operates on the basis of confidence, and Russia's image in the U.K. is not quite there yet," King said. "Russia is known for its scientific resources, but it will take time for it to improve its image and for investor confidence to follow."

"Remember, it took Britain 30 years to change its image," he said.

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