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Wednesday, March 9, 2011

Why does every Russian also need better Internet than Barack Obama’s?

Few countries speak so much of modernization and innovation as Russia does now. However, what we can see is kind of different from the stated objectives. There’s still a gap between the promise and the delivery. While Microsoft alone put up last year 3,000 new patents, Russia’s 22 largest government corporations combined only generated 1,000. I can’t help thinking if modernization is going to be anything more in Russia than a political mantra that the president and the prime minister keep repeating.

I was reading an interesting article the other day; it was about South Korea.

Well, all the different countries in the world choose different strategies; it’s all about what strategy you pick. South Korea picks to be a leader in innovation and technology, and they gave a young guy in a teacher’s jacket a budget of $25bn to raise the speed of Internet access for every domestic household to 1GByte/sec. When US President Barack Obama learned about this strategy he confessed that in that scenario, every single household in South Korea would have faster Internet access than the White House. That must be pretty fast, I guess, and in doing some Twitter and Facebook blogging any South Korean will get his or her downloads in one-tenth of a millisecond, while President Obama will only get his in a millisecond.

This is great competition, and domestic demand for improving efficiency is what drives countries’ development. Russia has picked up this mantra, and it’s good it has because this country has no choice but to get on this bandwagon.

Now it must show real results because young people will not stand for years and years of stagnation like the Brezhnev era. We live in an open world today; Russia is no longer a closed submarine under the Arctic ice. It is open for business with the world, and young people in this country know that.

Sure, there are lots of forces here that are against WTO, proper IP protection, modernization, etc. because they stand to lose a lot of money if the country modernizes. People make money in good or bad times, in modernization or stagnation; some people will always make money. The question is who and how much, and what generation.

It seems to me that the top leadership in this country is pushing the young people to drive Russia forward to modernization. Overtime they’ll have to be consistent on this message and deliver actionable results.

Margaret Thatcher also had an uphill battle back in the 1970s. Gee, her whole country was against her plans! The labor unions, the Academy of Sciences, the political elite, the educational elite—people across social strata were totally and completely against what Margaret Thatcher wanted to do to modernize the economy. Yet she continued to tell her message day after day, night after night on TV to every audience that would ever listen to her, and enough people began to believe her, and they began to implement her plan. She got laws passed, and she changed culture and set up the framework to create new society.

So the question is: does the political elite in Russia have a long-term vision to stick with this? It’s ok to start, but if they change in two or three years to a new mantra, or some new idea, it will just be hopeless. If they stick with this and fix the laws, and use law to motivate private innovators and investors to invest in the modernization of the economy, and if they use tax law and policy to push owners of companies to invest in themselves, creating a domestic market for innovation, then there’s a real, honest chance to develop this country as an innovation leader. Creativity here is clear; innovation is possible. Yes, the barriers are high, including cultural ones, but Russia has all the potential.

So, does South Korea need a 1Gbyte/sec. Internet access for every household? Absolutely. And so do the United States and Russia. And how does that compare to Cuba, North Korea or other countries that are closed? Those simply fall further and further behind.

Those that are advancing will advance faster; those that are falling behind will continue falling. Russia has no choice but to join the leaders. And that means investing not only in workable roads that are smooth enough for trucks and people to move around the country but in whole infrastructure: the energy grid, the electronic grid, the Internet grid, etc. Infrastructure for a 21st century economy implies liquidity and flow of people and information.

If Russia backs up its commitment—call it a mantra or rather a stated strategy—to go forward with real money, real infrastructure and real laws to encourage private investment, then Russia has every chance to succeed. I wish it will.

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