President Dmitry Medvedev was in California two weeks ago drumming up support for creating a version of Silicon Valley in Skolkovo, just outside Moscow. At the heart of the president’s push into the technology sector is the need to diversify Russia’s economy by developing new, innovation-based sectors.
But creating an environment in Russia that can foster such innovation is no easy task. Starting a business remains burdensome, and widespread corruption heavily impedes entrepreneurial activity. Silicon Valley’s venture capitalists also understand this, and that is why, they have largely stayed away from investing in Russia’s technology sector.
It is a situation in need of a remedy, and that remedy should start at the top — not just in Russia, but in the United States as well. Medvedev has been working hard to change Russia’s image. In May, he welcomed two dozen venture capitalists from Silicon Valley who visited Moscow to learn more about Russia’s leading technology companies.
Now, it is time for the administration of U.S. President Barack Obama to realize that it is in the U.S. national interest as well to support Skolkovo.
First, encouraging innovation and technological cooperation will benefit both countries by boosting the volume of bilateral trade. As New York Times columnist Paul Krugman has demonstrated, the economy of trade often works to allow countries with similar specializations — such as a focus on technology — to benefit from trading with one another. Rather than producing more Russian engineers in Russia and more venture capitalists in Silicon Valley, existing economies of scale and the demand for diverse technological products will ensure that engineers and venture capitalists blossom in both places. Over time, the exchange of ideas between the two technology hubs will allow Skolkovo to develop into a center of innovation that complements the work done in Silicon Valley, much like Route 128 near Boston, Bangalore in India, or Shanghai in China.
Second, there are also strong political reasons to support Medvedev’s initiative. Obama’s most important foreign policy success, the “reset” in U.S.-Russian relations, is premised on the idea that encouraging Russian cooperation in global politics can benefit the security interests of both countries. The same is true for cooperation in technology and entrepreneurship. Trade between Russia and the United States has grown in recent years, although it still remains at a disproportionately low level compared with U.S. trade with China or Brazil. As American support of technological innovation and entrepreneurship in Russia leads to more trade between our two countries, it will in turn create more interdependence between them. And this marriage will lead to greater predictability and stability in U.S.-Russian relations.
Two weeks ago, when we met Medvedev in California, we proposed one step that he could take to encourage Skolkovo’s development: the creation of a new U.S.-Russian Innovation Center, with offices in both Skolkovo and Silicon Valley, which would serve as a bridge between entrepreneurs and innovators in the two countries. This center would facilitate free and open communication between innovators and technologists in both countries by offering an open video conference facility and translation services. Such open communication would grant Russian entrepreneurs the opportunity to learn about global business practices and provide easier access to the financial resources available in Silicon Valley.
In addition, the center could be tasked with teaching Russians about the life cycle of startups through training courses. For example, the Russian-American Innovation Center could lead Russian entrepreneurs on instruction on how to secure different rounds of venture financing, how best to market their startups, and how best to develop exit strategies when they are ready to sell their startups or to take them public.
Medvedev hopes that his Skolkovo project will be good for Russia. But it can also be good for the United States and for bilateral relations. If Skolkovo succeeds, it will benefit not only both governments but also U.S. and Russian innovators, entrepreneurs and the consumers who use their products.
Eugene Mazo is a U.S. lawyer working in Silicon Valley. Andrei Kunov is a Russian entrepreneur in Silicon Valley who serves as the director of the American Business Association of Russian-Speaking Professionals.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.