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Analysis & Opinion
13.04.11 Innovative Russia
By Tai Adelaja

Over the past year, Russia registered across-the-board improvements in information and communications technology development, in a rare sign that multibillion-dollar government modernization efforts may have started to bear fruits. However, an extremely poor regulatory and market environment is still holding the country back from better leveraging information and communication technology in its competitiveness landscape, Global Information Technology said in a new report.

The report, covering 138 economies worldwide, ranks Russia 77th in its assessment of "the impact of information and communication technology, or ICT, on the development process and the competitiveness of nations for the year 2010 to 2011." Russia climbed three places from last year, when it placed 80th, helped by the country’s satisfactory educational and research base and a fairly ICT-conducive infrastructure, together with rather high levels of individual readiness and usage, the report said. In the overall technological empowerment, this year’s survey puts Russia ahead of Mexico, albeit a notch below Gambia.

The authors of the report, which was released Tuesday by the World Economic Forum (WEF), define the rating criteria as the degree to which a country is prepared to participate in and benefit from information and communication technology. The report also focused on ICT’s power to transform society in the next decade through modernization and innovation, with emphasis on the impact they will have on individuals, businesses and governments over the next few years.

Despite President Dmitry Medvedev’s relentless efforts to diversify the resource-based economy to an economy based on high technology and innovation, the country fared relatively poorly next to some of its BRICS (Brazil, Russia, India, China, and South Africa) peers. China, one of the largest Asian emerging markets, consolidates its position at 36th, after years of impressive progression in the rankings, while India loses some ground in this year's ranking and is down five places at 48th. Brazil climbs five places to 56th and South Africa, a new member of BRICS club, placed 61st ahead of Russia.

Russian Federation
Key indicators
Population (millions), 2009...........141.9
GDP (PPP) per capita (PPP $), 2009 .......14,913
GDP (US$ billions), 2009 .........1,231.9

Global Competitiveness Index 2010–2011 rank (out of 139) 63

Networked Readiness Index 2010–2011
Number of countries – 138
Overall score - 3.7
Overall ranking - 77

Market environment
Score 3.5
Ranking 118
Political and regulatory environment
Score 3.4
Ranking 111
Infrastructure environment
Score 3.9
Ranking 42
Individual readiness for ICT
Score 5.0
Ranking 59
Business readiness for ICT
Score 3.7
Ranking 90
Government readiness for ICT
Score 3.8
Ranking 89
Individual usage of ICT
Score 3.9
Ranking 55
Business usage of ICT
Score 3.0
Ranking 72
Government usage of ICT
Score 3.1
Ranking 96
Source: World Economic Forum

China, which is hosting leaders of BRICS countries in Hainan on Wednesday, is by far the country that leverages ICT the most among the five BRICS nations, leading India, Brazil, and Russia by 12, 22, and 31 positions, respectively. Since 2006, China has leapfrogged 23 positions and features among the ten most dynamic countries worldwide, the report says. Vladimir Dmitriev, chairman of state-run VneshEconomBank (VEB), who is attending Wednesday’s BRICS summit in China, told the Chinese Xinhua news agency that "member countries are to jointly finance projects in high technology, innovation and energy saving" after the summit.

President Medvedev has challenged Russian entrepreneurs to excel in information and communication technology by developing and producing modern, transformational and memorable products. And while the government has been investing hundreds of billions of rubles in key areas, including information technology, nuclear energy and energy efficiency, the state-controlled companies, which dominate these areas, have been slow to innovate. Economy Minister Elvira Nabiullina conceded as much in January. Last year, 22 of the top state-controlled companies registered only 1,000 patents combined, compared with 5,000 patents registered by IBM, she said. "There is money to invest. But practically no innovation," Nabiullina said.

Among factors stifling innovation is the country’s uncongenial political and regulatory environment. Russia placed 118th in terms of its market environment and 111th in the political and regulatory environment, according to the report. The country ranked 113th in the efficiency of its legal system in settling disputes, and placed 127th in the guarantee of property rights, a particularly sore point for the country. The report also shows that Russia's IT industry suffers from low firm-level technology absorption as well as a high level of government regulation. The country’s market environment is negatively impacted by limits on press freedom, non-availability of latest technologies and little time spent on staff training.

On the upside, Russia scores relatively well in the quality of its math and science education and its general capacity for innovation. The country placed 10th in the adult literacy rate, which stands at 95.5 percent. It also performs well in individual usage of ICT, clinching 9th place in the mobile phone penetration rate. Recent government efforts to boost and diversify the economy are reflected in the report, with the country ranking 66th and 80th in an E-government readiness index and E-participation, respectively. However, the report chides the government for its modest success in ICT promotion.

Featured in this year's report is the Networked Readiness Index (NRI), which examines how prepared countries are to use ICT effectively in three areas – ICT regulatory and infrastructure environment, readiness of individuals to use and benefit from technology and usage of available ICT by businesses and governments. “ICT, and the Internet in particular, have changed the world dramatically, and all indications point to an even higher rate of transformation of our lives going forward,” Soumitra Dutta, a professor of business and technology and co-editor of the report, said. Russia scored high in the broadband Internet usage component (51st place), but was pulled down in the use of virtual social networks (102nd place) and the general impact of ICT on access to basic services (101st place). Physical infrastructure also registers some improvement, with both telephone lines and electricity production receiving a boost. The country still lags behind in the cost of installation of residential and business phones, where it is ranked 133rd and 135th, respectively.

Sweden topped this year’s rankings, followed by Singapore, confirming the leadership of the Nordic countries and the so-called Asian Tiger economies in adopting and implementing ICT advances for increased growth and development. Finland jumped to third place, while Switzerland and the United States are steady in fourth and fifth place, respectively.
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