Innovation and nanotechnology development in China and Russia

Evgeny Klochikhin, PhD Researcher,Manchester Business School, UK

CEELBAS Workshop on Russia’s Skolkovo in Comparative and Historical Perspective, London, UK, 13 June 2012

Theoretical dilemmas

• Is BRICS an academically valid concept?• What is the global innovation system: a firm-

centered network or a set of distinct NIS?• How to apply the NIS approach in developing

countries: a heterogeneity discussion• Can we transfer the transition experience of

CEE countries to Asia?

Research questions• How Russia and China can exploit their science and

technology (S&T) history to promote indigenous innovation development and resolve the weaknesses of the former state planning system?

• Are there any particular complementarities between the Russian and Chinese innovation that can contribute to their socioeconomic development?

• What are the current and emerging opportunities for mutual leaning between the two countries?

• What is the role of technology-based growth strategies in this process?

RUSSIA and CHINA

Social and political status of science and technology

Quality of STI and technology transfer

STI policy system

System of IPR protection

Soviet S&T systemStrengths• High profile and continuity of

science• Support of highly-qualified S&T

personnel• Good level of theoretical research• Massive resource allocation to

S&T• Block system of science funding• Prioritization of most important

S&T projects• Knowledge as a public good that

can be freely used by all agents

Weaknesses• Lack of S&T equipment in research institutes• Inhibited information flows• Separation of research and teaching• Technological ‘backwardness’• Low productivity and rates of ROI• Weak technology diffusion• Risk averse culture• Weak computing capability• Poor training of researchers• Rampant departmentalism and political

involvement• Emphasis on the military• Corruption and nepotism• Lack of enterprise autonomy• Reluctance to dissolve unsuccessful SOEs• Imbalance between risk and reward for

innovating• Lack of mission-oriented approach• Low patenting activity

(Klochikhin, 2012)

Historical perspectiveUSSR/Russia China

1917

1930-1950sLysenkoism

1960-1970sSTI frontier

1980-1990sDecline

2003-presentReform

1911

1949

1950sS&T expansion

1966-1976Cult revolution

1978-1992Open Door Policy

1990s Post-Tian’anmen Decline

1997-present Back on track

From S&T to innovation: system transition

• Linear (sciencetechnologymarket) to complex innovation model

• Network creation and establishment of brokers: MNCs? FDI? Government? (Radosevic, 1999)

• Four pillars: the structure of economic organization, price formation, decision rules, and incentives (Lange and Taylor, 1938)

Opportunities for mutual learning• Turning universities into research institutions• Rethinking the state planning legacies• Finding effective ways to employ state-owned

enterprises as major innovation actors• FDI and knowledge spillovers – not an only solution

for innovation growth• Development zones and SEZs: extensive vs. intensive• Regional spread: more infrastructure investment• Mega-projects: good strength of prioritization?• Turning ‘brain drain’ into ‘brain gain’

China-Singapore Suzhou Industrial Park• Covers 288 sq.km• CAS institutes, 24 universities and colleges in Suzhou, 1,400,000

university students in Jiangsu Province• China-Singapore agreement in 1992, launched in 1994• Ownership: 52% Chinese govt, 26% Singapore govt, rest – private

investors• Mostly manufacturing, since 2000 rapid building of innovation

capabilities (SISPark; Nanopolis-Suzhou, etc.)• Good local embeddedness: Dushu Lake Higher Education Town - “18+

universities, 1 institute and multiple parks", 70,000 students• Important zeal for innovation by local (SIP), regional (Jiangsu), and

central govt• SIP govt is a separate authority NOT under the Suzhou municipality• Many local incentives for start-ups

Major challenges: lessons for Skolkovo• China pursues extensive growth strategies: no limits to the number of

industrial parks and SEZs (tax incentives are also massive and have vague time limits)

• Industrial parks are nurturing ‘favorites’ and provide excessive funding for incubators, which hinders competition with capable outsiders and general market conditions

• Excessive political involvement in innovation development: all final decisions are made by the local/central government

• Top-down approach: spontaneous clustering is more effective• No clear rules for exits (aggravated by the problem of heavy political

involvement in all investment decisions)• Poor networks: few independent service firms and venture capitalists

to ensure smooth tech transfer• Low-tech is also important• Poor diversification: e.g. nanomaterials are the priority but higher value

chain areas (nanodevices, nanobio) are underdeveloped

Nanotechnology• Can it be implemented bypassing the major

system weaknesses and path dependencies?• Can it help resolve the major challenges and

break the existing lock-ins in the construction of effective national innovation systems in transition economics?

Russia and China - nano  Russia China

Launch  of  the  national  nano program

2007 2001

Significance  of  nano component in STI policy

Highly important One of the areas to support

Policy design Highly centralized Dispersed among diverse programs and institutions, center and regions

Scale Several fields (mostly nanomaterials)

‘Across the board’ (but mostly nanomaterials)

Regional spread Across the country Concentrated in several key regions

Commercialization mechanism

Rusnano Tianjin Nanotech Industrialization Base; Shanghai Nanotechnology Promotion Center; Nanopolis Suzhou, and others

Regular evaluations Annual, carried out by the Ministry of Education and Science

Varied (basically part of larger S&T policy evaluations)

Conclusions• History matters• System and policy path dependencies are two

distinct phenomena• Policies in both countries are aimed at extensive

development (as opposed to intensive growth strategies)

• Many opportunities for mutual learning between Russia and China but not from the United States

• Nanotechnology is a fuzzy field with no clear leader – every nation is exploring its own ways

Policy recommendations• Need to overcome the extensive-growth bias• More democratization and transparency of the science,

technology and innovation policy making process with broader involvement of the academic community and wider public:a) involvement of a bigger circle of university researchers and think-

tanks into policy consultation and evaluation; b) establishment of an independent agency that would openly

present the interests of the academic community at the top political level

• Better legislation and regulation for the innovation process• Development of private sector and reducing the role of the

state in the national economy: privatization is not the only solution (competition, science-industry links, demand side)