2009; IBM, 2009). Some of the reasons for this low rate of conversion of basic science to innovative technologies and products can be understood from the recent history of Russian S&T.

After the fall of the Soviet Union, Russian science encountered significant challenges. First, because of the easing of emigration and travel restrictions, many Russian scientists left the country, and this brain drain continues today. By 2002 it was reported that more than 500,000 scientists had left Russia (BBC, 2002). This trend includes in particular the most gifted, often middle-age scientists at the peak of their scientific productivity. This emigration not only causes substantial economic damage but also contributes to the aging of S&T personnel in an already aging society. Naturally, the more established, older S&T personnel are more likely to be rooted in the past traditions of the Russian S&T system, and they often oppose the necessary reforms that have occurred in other countries. Second, after the fall of the Soviet Union, Russia’s budget for science shrank, becoming three to four times smaller in 1992 than it had been in 1990 (Saltykov, 2007). Throughout the 1990s, many S&T institutions lost basic research capabilities (Graham, 2003; Goldberg, 2005). Finally, the central S&T planning approach of the Soviets, with clear thematic priorities for national security and military applications, had served as an effective framework and guide for Russian scientists. By contrast, the early days of the Russian Federation lacked larger thematic priorities, and until today S&T activities have been fragmented, not aligned to priority subjects, and have included little interaction between the S&T institutions.

Until very recently, S&T research was mostly conducted by publicly owned R&D institutions. The support for these institutions came mostly from “block funding,” which was the result of centrally made planning decisions. Little accountability was attached to these block funds, which were often handed out based on political influence. Competitive funding mechanisms, either through public-private partnerships or venture capital, were not available. During the Soviet era, application and transfer of S&T knowledge was part of a larger plan, which was driven solely by the central government. Without the government as a customer, there is no incentive for Russian scientists to drive basic research into innovative solutions and products. The lack of an entrepreneurial tradition has resulted in an S&T system that is very weak in commercializing new technology products.

The concept of intellectual property (IP) rights for individuals or non-public entities has little tradition in Russia. Often assignment of IP rights is not transparent; specifically, it is unclear if the IP belongs to an individual inventor, an employer, or a government R&D sponsor. Naturally, these uncertainties have hindered effective collaboration between private firms and public institutes, inhibited technology transfer, and severely impaired the generation of spinoff companies.

Russia is the largest country in the world, but its research policies and strategies still are predominately shaped and implemented at the federal level, with the Ministry of Education and Science playing the main role and the primary regional governments playing a minor role. However, the president, government, and legislature have recently founded new organizations that support the S&T priorities, underlining the fact that S&T strategy has gained special attention in Russia.

Modernization of State-Owned Industries

It is clear that major changes in the innovation ecosystem are required to modernize the inefficient state-owned enterprises. In fact, the public-sector share in Russia has never fallen below 40 percent, and during the recent financial crisis, it has increased. The Russian president stated in his November 12, 2009, address to the Russian Assembly that “this legal form of enterprise has no future overall in the modern world” (Medvedev, 2009c); he declared that by 2012 there will be a plan for determining an optimum level of participation by the government in the operation of commercial business.

The lack of activity in high-technology sectors, such as nanotechnology, by the private sector needs to be addressed. One approach is to organize a system of state orders for long-term procurement of innovative products. Other ideas include creating a “green corridor” or special trade arrangement to facilitate the export of hi-tech products, as well as instituting more favorable customs clearance procedures.

In November 2009 the president issued instructions for the prime minister to submit proposals to deal with reforming and privatizing state corporations (Medvedev, 2009c). These proposals, which the president asserted

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