Putin on Innovation

I find these comments by Putin to be the most encouraging ever. The western press loves to get frantic over Russian bluster, forgetting that it is part of their culture to negotiate through bluster. This comment acknowledges that the encouragement of internal innovation is becoming central to Russian economic development.

This means that the establishment of effective laws will become a priority, though more likely that will mean more effective application of laws already on the books. Entrepreneurs need to prosper and not be haunted by the internal problems that have dogged Russia’s transition from the state ordered system to its current form of market economy.

At the same time, their special form of crony capitalism and so called organized crime capitalism has also run its course, mostly because of age. The beneficiaries will want to prepare for their mortality and the rule of law is needed to ensure that their transition plans outlast them.

Russia has arrived at a consensus for the application of a universal system of corporate law and a system that makes the rule of law work. They took the long way around but they have gotten there in the end.

This makes the prospect of doing business in Russia far less daunting. And recall that today, Russia is MacDonald’s most successful division. In fact, the advent of that first restaurant completely reshaped Russian ides of customer service. So it was not a case of telling Russians how to do things better, which everyone was guilty of, but a spectacular case of showing them how to do it better that actually worked in the end. We today forget just how influential MacDonald’s was in terms of the US restaurant market and are therefore a little surprised when the same holds true elsewhere.

Putin urges innovation to revive Russia

by Staff Writers
Moscow (AFP) May 27, 2009


Russia must focus on technology and innovation to modernize its economy or risk falling behind other world powers, Prime Minister Vladimir Putin said on Wednesday.

"We need to move forward, to put the economy on an innovative track," Putin told an audience of business people in Moscow.

"Otherwise, doing nothing, we will simply preserve the current not very effective model which depends very much on external factors... and will continue to lag behind the world's leading economies."

Putin's comments echoed the criticism of many analysts who say Russia is overly dependent on the export of natural resources, especially oil and gas
, leaving it susceptible to sudden drops in commodities prices.

The Russian economy has been hit hard amid the global economic crisis, which has seen oil prices plummet from over 147 dollars a barrel last summer to currently around 60 dollars.

Putin said that despite budget cuts, the state would spend over 300 billion rubles (9.6 billion dollars, 6.9 billion euros) in 2009 to support high-tech sectors like aviation, atomic energy, space and electronics.

He argued that Russia had "serious competitive advantages" in sectors like space, saying that the country could increase its share of commercial space launches from 40 percent to around 50 percent.

The prime minister also called on business to be more far-sighted in its approach to innovation.

"In the business sphere, the status of the innovator and the inventor must be raised.... A culture of innovation needs to be created," Putin said.

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