Medvedev Should Look at China?€™s Silicon Valley

Did President Dmitry Medvedev pick the best place to learn about innovation when he visited Silicon Valley on Wednesday? Perhaps he should have visited Zhongguancun, China’s technology hub located in the Haidung district of Beijing. Russia’s focus on the United States and Europe ignores the growing importance of Asia, and especially China, in global science and education.

Russians and Chinese share the challenges of building competitive, innovation economies on the remains of Soviet-style systems characterized by separation of research and education. Both countries have significantly expanded their higher education systems since they started economic reforms, and both are creating a limited number of “research universities” that receive priority funding.

Despite starting from a much lower base, China has been more successful in fostering university-based research and development, developing university linkages with industry and globalizing into the world economy. China now ranks second to the United States in publications in international peer reviewed journals.

The key to creating world-class universities is attracting top students and faculty. More than 200,000 foreign students are studying in China. These numbers dwarf the figures for Russia, where 40 percent of the 90,000 foreign students are from former Soviet republics and another 40 percent are from Asia.

More researchers who have spent time abroad return to work in China. The range of measures the Chinese government and individual institutions have adopted to encourage returnees offers a stunning contrast to the failure of Russian programs to induce “compatriots” to return.

The most important factors in China’s success have been incentives and competition. The number of faculty with foreign degrees and faculty publications in international peer reviewed journals are important criteria in selecting institutions for elite status and awarding funding. For individuals, tenure has become less common, and performance evaluation based on publications in international peer reviewed journals is becoming widespread. These incentives have fostered competition among institutions, local governments and bureaucratic actors to attract returnees and increase internationalization.

The competition continually fosters creativity in offering new incentives, and over time this has begun to change the overall climate. In contrast to the broad changes in China, much of the recent discussion about recruiting specialists from abroad to Russia has focused on visa rules. Even if all of the visa, registration and employment rules for foreign specialists are fixed, this is just the beginning. The incentive structure and accompanying psychology at universities must be changed radically. Russian universities still do not recognize foreign Ph.D. degrees unless the credential is vetted on an individual basis.

Both countries significantly increased their financial support for education and science in the decade from 1999 to 2008, but the end results were very different. China’s elite research universities are becoming globally competitive, while Russia’s remain, at best, promises for the future. China and Russia have been on opposite trajectories in global rankings of universities, publications in international peer reviewed journals, patent registrations and their ability to attract talent from abroad.

Russia’s performance is vastly below what should be expected given its expenditures on science, technology and education. China has received a higher economic return on its infrastructure investment. Chinese firms have performed well in adapting technology for the growing domestic market. In autos, information and communication technologies and other fields, they are poised for global competition. A Chinese computer center recently developed the world’s second-fastest supercomputer.

Russia’s situation is both better and worse than this comparison with China indicates. It is worse because Russia has wasted two decades, market reforms have been discredited by proponents of “national champions,” and many talented Russians who have emigrated will never return.

Yet in some respects, Russia’s situation is better than it was a decade ago. Traditional areas like math and theoretical physics have retained their reputations as global leaders. The government is spending more on education and science, despite the economic crisis. Younger Russian scientists are more mobile internally and more open to international contact and collaboration.

What’s more, Russia is introducing two new programs to promote innovation. An Education and Science Ministry competition, open to researchers from abroad, aims to attract 80 top scientists to Russian universities. The government has allocated 12 billion rubles ($386 million) for 2010 to 2012.

The most coveted prize in the global brain competition is developing places where creative people want to work. Clusters of innovation like Silicon Valley, Bangalore or Zhongguancun become self-perpetuating, as talented people congregate to work alongside the best minds in their fields. Russia’s answer is Skolkovo, intended to be an innovation incubator. Zhongguancun can offer some valuable guidance for Skolkovo.

Lacking the power to control development, local officials sought ways to help foster technology businesses drawing on Beijing’s R&D community. It helped that Chinese officials are evaluated on the basis of improving the local economy. Over time, the R&D and business communities based in Zhongguancun exerted significant influence on Chinese government policy, helping advance globalization.

Medvedev and Prime Minister Vladimir Putin both have teams working on the innovation project. Optimists would say this demonstrates Skolkovo’s importance, while pessimists would say those benefiting from natural resources-based development want to embrace the innovation initiative in a bear hug tight enough to smother it.

Even if all the goals for Skolkovo are met, it will have only a limited impact on the rest of Russia. High-tech enclaves do not usually change societies, but in this case the scientists will have global connections, while elsewhere internationalization will remain more difficult.

Russia must improve institutional performance by creating incentive structures that change the behavior of academic and bureaucratic elites. China’s successes have not come easily and are due in large part to coalitions of scientific, educational, local government and business interests with incentives to support and increasingly influence reform and top-level reformers. Above all, Russia needs a comparable constituency for internationalization and innovation to overcome unfavorable incentive structures and entrenched interests.