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Thursday, March 29, 2012

Siberia on its way to create its own analog of our Silicon Valley

One of Russia’s leading business monitors, RBC daily, pooled efforts earlier this month with the St. Petersburg Politics Foundation and the Russian Presidential Academy of National Economy in putting together a ranking of Russia’s regional innovation activity for the first two months of this year. The four leaders in this ranking are the Krasnoyarsk, Tomsk and Novosibirsk regions and the Republic of Tatarstan.

My first thought upon looking at RBC’s publication was, “Such an interesting ranking! The first three are all Siberian!”

I think it’s very difficult to determine which regions out of Russia’s 83 are the top ranked. In my opinion, any type of ranking certainly involves a lot of objective economic statistics and investment indicators and numbers that can be tracked, but there’s also a certain amount of subjective emotional assessments.

The most current ranking clearly shows the importance of Siberia as a leader in Russia’s development as an innovation economy. Placing the Krasnoyarsk region ahead of Tomsk, last year’s indisputable number one, might be questioned, though, but the overall trend is clear.

Perhaps, psychologically this is because of the independence of much of the people in Siberia. I recall several years back meeting an economist on a flight from Moscow to Novosibirsk, and the economist was a woman my age. She had studied economics in the former Soviet Union in Novosibirsk at the same time that I had studied economics in the United States. And we compared notes.

I was shocked to understand that they were teaching almost exactly the same things in Novosibirsk at that time about realities of market economics and failures of the Soviet Union as I was learning in my own studies at Stetson University in the mid-1980s.

From this example I understood that the people in Siberia were very far away—not only geographically but perhaps also culturally—from Moscow and from Gosplan and other structures of the Soviet Union. And this independence was perhaps relegated to the far-away regions of Siberia during the time of the Soviet Union. With the crash of the USSR and the country’s opening, as the economy has become globally integrated, new technologies have allowed this to only strengthen.

That woman explained to me that the books that they read in Siberia in the 80s were open although they were on black lists in Moscow. In Moscow, the knowledge that they were learning openly in Siberia was not allowed to be taught.

For me it was shocking to see that. Today it’s not shocking to see that Siberia is becoming one of the leaders in Russia because the true innovation economy is a bottom-up driven economy. The regions that have allowed their young innovative entrepreneurs to thrive and to grow, and to develop themselves, are naturally going to become the leaders in any emerging innovation economy in Russia.

Any global economist can demonstrate the importance of top-down macroeconomic strategies on the part of the government to develop very large-scale government priority projects. This is clear and historically obvious; you can see the results in the space race to put the first man in orbit and then on the Moon, for example. These top-down programs significantly accelerated human development. But taken alone top-down economic initiatives and macroeconomic programs are not enough to create an innovation economy. They must be met by bottom-up initiatives of individual people proposing their own ideas, which can solve specific market related problems.

Therefore it seems to me absolutely non-surprising that three top regions in Russia, Krasnoyarsk, Tomsk and Novosibirsk, are all based in Siberia. And I believe they are going to create their own analog of our Silicon Valley, a very strong innovation clusters system. And perhaps what will emerge is a network of open collaboration between these different cities as exists in different parts of the United States, for example. Silicon Valley is a very long geographically spread out place with different base structures, which are interconnected by human capital and infrastructure and government programs and private programs. So I expect that to develop also in Siberia.

The inclusion of Tatarstan in the list is very exciting to see because I think as a region it deserves this high ranking. I’ve seen for myself the efforts that the local government has put into such organizations as Techno-Park Idea, technopolis KhimGrad and IT Park. These macro top-down investments, including the development of the Alabuga SEZ, have been instrumental in attracting investors, and not only Western manufacturing investors but also financial investors. The emergence of Tatarstan’s Clean Tech Fund has been a very positive development showing Tatarstan as a region to be extremely proactive in attracting financial investments in clean tech and hi-tech industries.

This doesn’t mean that other potentially attractive innovation clusters in Russia, surrounding certain regions of Moscow and St. Petersburg and Nizhny Novgorod and Samara, aren’t also developing rapidly. I think they are, but they may be working ‘below the radar.’ I think what sets apart those regions in Siberia is firstly the very strong independent nature of the local people who are promoting themselves and their regions. I think the same can be said of Tatarstan; the region has been promoting itself throughout the world for five years through different chambers of commerce in the United States, the UK, in Moscow—all over the world Tatarstan representatives fly out to business associations around the world and present themselves. This has created a certain image of the region as very progressive, and it’s well deserved.

I think that in the next few years other regions will more and more begin to do exactly that, and they should do that.          

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