Competition and fighting corruption are part of modernization – Medvedev

Modernization is not just a conversion to an innovation economy, but requires fighting corruption, decreasing administrative barriers and the development of fair competition, President Dmitry Medvedev has said.

Speaking at a meeting of the Presidential Commission on Modernization and Technological Development, the Russian head of state said, “Neither me, nor, I hope, everyone present here have ever regarded modernization simply as a transition to an innovative economy, as a technological modernization.” That link is indeed crucial, he believes, but there are other conditions that might be even more important for the entire process of modernization to be a success.

And those other conditions are: the issue of fighting corruption, decreasing administrative influence in the country and the development of honest competition.

According to the president, the fact that Russian people see those three issues as key ones “is rather symptomatic.” The comment referred to an article in Russian daily Vedomosti. “I noticed that one newspaper, I think it was Vedomosti, wrote that our citizens have a completely different understanding of modernization than the president does,” he said. “But newspapers always exaggerate. It is absolutely normal, and sometimes even necessary.”

Five steps to boost ventures

The commission gathered on Tuesday at National University of Science and Technology “MISIS” to outline the key problems the country faces on its path to the innovative economy and to work out ways of tackling them. The main focus of the meeting was the development of the venture investment market.

President Medvedev has long been pushing for reforms and for finally moving on from “primitive resource-oriented economy.” But those changes cannot happen overnight and now one of the problems the leadership has to find a solution to is how to convince investors to commit to a risky business.

Addressing the participants of the gathering, Medvedev suggested five measures for the development of venture capital. Among them are improving the law, the development of the system of expertise and other services, the more efficient use of grants, developing local financial market as well as creating an attractive climate for foreign investment and, finally, it is necessary to organize the non-stop and well-co-ordinated work of all the links of the innovative chain.

"Firstly, transition to the innovative economy aggravates the forms of doing business. Emerging venture funds and start-up companies have to deal with much higher risks and enter more complicated relations. And they need new effective organizational and legal forms," he said, as quoted by Itar-Tass agency.

"Secondly, it is necessary to develop the system of expert evaluation as well as the whole range of consulting services – including legal, information and accounting – that will be in demand among businesses," he said. According to the president, any start-up that gets no support and has no ability to have civilized business is doomed to failure. He noted that the infrastructure support of business should be reasonable and sufficient.

A third necessary step, Medvedev went on, is to “expand the fields financed by the Fund for Small Business Support using the mechanisms of grant and repayment financing."

"Fourthly, it is necessary not only to actively attract foreign investments, but also to develop the domestic financial market and create such conditions that allow the capital attracted to stay in Russian companies, irrespective of circumstances on the international markets," the president said.

Finally, Medvedev urged the non-stop operation of all the links of the innovative chain and co-ordination of development institutions. "We have repeatedly set the task of creating ‘a green corridor’ for high-tech companies. It is time to create a single information base for such projects and a kind of a logistics system for innovative projects," he is quoted as saying.

Following the presidential speech, participants of the meeting voiced their views on stumbling blocks on the way to developing ventures and made proposals about how to make the work in that field more efficient.

The rector of the MISIS, which hosted the Commission session this time, Dmitry Livanov, focused on educational problems, as professionals – or the so-called “creative class” – are among the key elements of success in modernizing the country’s economy. He was rather harsh in criticizing Russia’s education system, saying the demands are quite low, as a result of which over 90 per cent of students leave the university doors with a diploma, while in the West that number is a lot lower. Livanov suggested decreasing the a number of institutes in the country, since many of them – except for top universities – are mainly a place where youngsters enjoy their time socializing.

The Presidential Commission on Modernization and Technological Development was created under Medvedev’s decree signed in May 2009 and is chaired by the head of state. Tuesday’s meeting became its 14th gathering so far.