RD Interview: James Ming Chen, professor at Michigan State University, discusses the particular challenges of Russian innovation, including the prospects for Russia’s National Technology Initiative.

About 700 business leaders, government officials and representatives of the academia took part in the 2016 Foresight Fleet. Photo: ASI

With Russia still struggling to emerge from recession, focus has shifted to the ways of innovating its economy. Doing so, however, would likely require Russia to adjust its top-down innovation culture to a bottom-up, grassroots approach.

One potential hope for Russian innovation is the National Technology Initiative (NTI), announced by Russia President Vladimir Putin during his address to the Federal Assembly in December 2014. The NTI envisions Russia becoming a global technology leader by the year 2035.

Russia Direct recently sat down with Professor James Ming Chen, professor at Michigan State University, to discuss if Russia will be able to modernize its economy through the National Technology Initiative.

Chen participated in the Foresight Fleet, a steamboat trip along the Volga River, from Samara to Astrakhan, which took place on May 15-19 within the framework of Russia’s NTI.

Organized by the Agency for Strategic Initiatives (ASI) and the Russian Venture Company (RVC), the trip brought together Russian and foreign scholars, entrepreneurs and officials to address Russia’s technological challenges as well as determine future markets where Russia might compete.

James Chen
Russia Direct: What are the odds of the NTI initiative and the Foresight Fleet being successful in the future?

James Chen: The deeper the pool of people doing the basic science you have, the deeper the pool of potential financiers will be: These people have knowledge about bridging basic science to applied science, to translational science, to commercialization, to marketing, to finance.

From my interaction with the people on the steamboat, many participants of the Foresight Fleet are keenly interested in deepening the pool, especially, outside the basic sciences  everything from identifying potential commercial applications to getting funding and partners inside and outside Russia. This includes ultimately commercialization and a profitable delivery of a product as well as successful exit from initial start-up stage. It usually means in our country [the U.S.] the creation of Initial Public Offerings (IPO) and the sale of their shares on one of the regulated exchanges.

Everyone is interested in meeting new people and getting new ideas. The best way of describe the interest that I’ve observed during the Foresight Fleet is everyone is looking for ways to improve their profile in whatever their role  as a scientist, as a potential owner of business, as a financier, as an intermediary, as a government official whose public mission is to improve commercialization. All of that is happening in parallel with the NTI official agenda. It will be interesting to see how the official channels will contribute to the NTI.

RD: You mean, whether it will be effective remains to be seen?

J.C.: It does remain to be seen, because the success of commercialization can be measured only in terms of the real results on the market. What is the success of this initiative? We don’t know. The future cannot be forecasted. We don’t know which random interactions this boat and this weekend will generate or whether it will create the sustainable connections that bring real changes.

Russia has a particular view of how innovation should start. For example, Moscow State University has its laboratories and top-down directives. But it suits Russian culture and history given that so much of innovation has been centralized. This is just my impression.

But many successful entrepreneurs in the rest of the world may not finish school or they just started school. They get what they need and leave for a business opportunity immediately.  So, on the one hand, there is the formality of the Russian system, with the almost random informality of the market-based business of the whole world on the other hand.

RD: Do you think the Foresight Fleet can be seen as a grassroots project as some organizers argue? To me, grassroots means a bottom-up initiative without government support.

J.C.: Grassroots means a movement from the people, not from the government. It is a bottom-up movement. But the NTI is very much top-down, centralized planning.

RD: So, should Russia unchain itself from government control to innovate its economy more effectively, as some argue?

J.C.: It depends on the type of innovation. Certain types of innovations, historically, for very good reasons have been under tight government control: Military technologies by definition have to be under government control. But outside military there are competing theories what is the best setting for innovation: Is it a very large single firm (which may or may be not government-directed) or is innovation better suited to setting many smaller, more diffused enterprises. And this is a long-standing economic debate in the rest of the world.

RD: What model is better, from your point of view?

J.C.: Again, it depends. Certain types of research require so many failed attempts and so much upfront investment, because the regulation of such things as pharmaceuticals and biological products, medical devices for treating human health  those are extraordinarily highly regulated fields that require billions of dollars or euros and advance investment. That kind of investment is harder to imagine being completed on crowdfunding and smaller platforms.

On the other hand, smaller targeted types of innovation don’t necessarily require brand new forms of science  they just require modest improvements or customization of existing technology based on consumers’ tastes. That may be something, which could happen easily on a smaller scale, from the bottom-up. To be honest, I am not certain what, if any, role government can play in that type of environment, because the bureaucratic model doesn’t suit that form of innovation very well.

Finally, government is not for profit, so people who have a vision of what is good for society might be opposed to offering prizes for scientific challenges. But what government can do is to motivate people to think about the new ways of solving a basic problem of science and mathematics. The most beautiful discoveries are the ones that are philosophically attractive and have a natural appeal for us as thinking, scientifically oriented people. It means discoveries and inventions that touch many different fields all at once.

RD: What is the potential of Russia to be competitive in new markets?

J.C.: Russia was the first country to reach outer space. And the fields of basic science are strong in Russia. There is a reason to believe that there are very strong scientists in Russia.

RD: But many talented Russians are leaving their country because they don’t see perspectives here.

J.C.: Indeed, many of our conversations [during the Foresight Fleet] dealt with the recent export of talents from Russia: the smartest people, the scientists, the inventors, and the entrepreneurs. When they leave, they don’t come back. It is the brain drain. And at the same time, Russia is not attracting as many talented people from the rest of the world to come to Russia and stay in Russia as it has historically.

And this is the geopolitical change of the last 25 years. The question is what in this environment, in the immediately foreseeable future can Russia do to reverse the outflow of talents from its own country and, perhaps, increase the inflow or the import of top-level talents, so that Russia can at the very least keep pace with the rest of the world and ideally improve its current position.                   

To learn more about Russia’s attempts to modernize its economy within the National Technology Initiative, subscribe to Russia Direct and download our May report.