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Dmitry Peskov, Head of the “Young Professionals” project at the Agency for Strategic Initiatives, shared with RIAC Program Director Ivan Timofeev his insights on the competitiveness of the Russian economy, on the role of innovation in the development of the country, as well as on the future of Russia.

Dmitry Peskov, Head of the “Young Professionals” project at the Agency for Strategic Initiatives, shared with RIAC Program Director Ivan Timofeev his insights on the competitiveness of the Russian economy, on the role of innovation in the development of the country, as well as on the future of Russia.

What factors will determine the competitiveness of the economy in the foreseeable future (2030-2035)? Since there are many important factors, could you identify two or three bullet points in general and for Russia in particular?

Generally speaking, the presence of some unique factor that would make a country the only or the best supplier in the global supply chain of a given product is decisive for ensuring the competitiveness of that country’s economy. In the 2020s, we will face total confusion in the distribution of energy resources and the logistics behind exploiting them. I think that the 2030s will be a period of consolidation of large companies, making them global in a new way. But to integrate into the economy of the 2030s and be competitive in it, a country should have some unique advantage. The latter might be access to natural resources, oil, gas and rare metal deposits, or proximity to key markets. In my opinion, by 2030, low labor costs will no longer constitute a factor of competitiveness. By that time the development of robotic automation will make the use of machines or programs cheaper than human labor. We are approaching a level of production process standardization that makes the ability to create new products in demand not only on the domestic market, but globally too, the key factor.

We are approaching a level of production process standardization that makes the ability to create new products in demand not only on the domestic market, but globally too, the key factor.


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Can we assume that the effect of these factors is true for Russia as well?

By all means, yes. However, mentality is another very important aspect here. We are not very good at things related to standardization. Russians find it practically impossible to comply with standards anywhere or under any circumstances, since it runs counter to our internal nature. At the same time, we have a truly unique advantage due to our systemic view of the world and fundamental strengths in education. Our physicists and mathematicians are the best in the world and will have no rivals for at least another 25 years.

At a conference at Cambridge University a few years ago, I met an elderly Russian scientist who headed the department of scientific research at the largest enterprise in China which assembles liquid crystal displays for smartphones. I asked him what his job there was, and he answered “I go there several times a year and solve problems. They have their own scientific institute, and train specialists who are able to solve standard problems and even develop some innovations. However, when it comes to the next stage of increasing computer resolution, they are facing a physical problem that they cannot solve and they summon me. I come, solve the problem and leave.”

Another strong feature of the Russian economy is arms production. The market for weapons, of course, will remain strong and provide a competitive advantage for our economy. The idea of creating a means to overcome the technological superiority of an opponent is built into the Russian national character. In turn, the better products our competitors develop, the more fun it will be to counter them effectively by cheaper means.

Russians find it practically impossible to comply with standards anywhere or under any circumstances, since it runs counter to our internal nature. At the same time, we have a truly unique advantage due to our systemic view of the world and fundamental strengths in education.

Is it possible to organize all of this into a system? On the one hand, we cannot work under standards, but on the other hand, any system is a standard of some kind. Can we utilize our fundamental nature in manufacturing and effectively capitalize on our strengths?

I know only a part of the solution to this problem, that related to the management of people. In 2013, the first start-up for “selling” talent appeared in the United States. Suppose there is a gifted young man with a good track record, who wants to study in one of the top 10 business schools, for which he needs 100 thousand dollars. He shows up and says, “I need 100 thousand dollars for training. In exchange for this, I am ready to give 20 per cent of my annual income over the ten years after graduation to any persons who give me this money.” It is important to learn to recognize the great potential in the individuals that will eventually work to the benefit of your economy.

Is this a type of investment?

Silicon Valley has gained unique experiences that cannot be reproduced in any other part of the world, first of all, the experience of creating new industries through competitive mechanisms.


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EuroSkills 2014

In fact, it is private equity.

If so, can it be traded?

Yes, absolutely. These start-ups offer quite attractive option programs; moreover, they are extremely beneficial for pension funds. Nobody knows what might happen to tangible assets in the future, but you can be absolutely certain that the graduates of the Wharton School of Business will be none the worse off.

Russia needs to learn how to capitalize on talent of this kind, but I do not know exactly how to organize this scheme. It is my piece of the puzzle to solve this problem.

What are the competitive advantages of the Americans and the Chinese?

America is very different. I think that Silicon Valley will turn out okay. Silicon Valley has gained unique experiences that cannot be reproduced in any other part of the world, first of all, the experience of creating new industries through competitive mechanisms. The X Prize contest illustrates such a mechanism perfectly well. The Americans have relied on it to create an entirely new industry of private space exploration, which over the next five years will make Russia lose its status of the first space power. In 2020, we, unfortunately, will see a very different picture with regards to space exploration. The United States does not have to create anything; it should just needs to retain its attractiveness for talent from other countries. A number of technologies already exit, in which it is currently investing, including the so-called massive open online courses (MOOC) that allows it to identify a talented 12-year-old Mongolian boy with exceptional abilities in physical chemistry and a year bring him to work in Silicon Valley.

As for China, it’s difficult to say something definitive, since there are constant debates underway on this subject.

Can China create innovations or just copy them?

I’m inclined to think that the latter is true. Many believe that sooner or later that quantity turns into quality. Others say that the Chinese hieroglyphic thinking inhibits innovation in fields such as physics and mathematics, which requires thinking in abstract categories and analytically rather than in images. I do not see bright prospects for China, but I could be wrong. In any case, due to its size and the power of large numbers, the country is sure to retain a certain leadership role.

Others say that the Chinese hieroglyphic thinking inhibits innovation in fields such as physics and mathematics, which requires thinking in abstract categories and analytically rather than in images. I do not see bright prospects for China, but I could be wrong.

Your work implies technological forecast. Do you take political factors into consideration?

Yes, we do, but we try not to reflect them in final documents and elaborations. When you talk about politics, it is impossible to remain a detached onlooker, and you somehow begin to influence the process. The impact on the process, in turn, distorts the results of your observation. Therefore, if we are talking about observation rather than an attempt to design the future, we try to relegate politics to the background.

In the field of technology, there are two different understandings of the word “policy.” On the one hand, a policy can slow down technological trends, but it cannot stop or reverse them. On the other hand, there are a number fundamental issues pertaining to the policy of technology use. We do not know what might happen in the next few years, for example, in the field of genetic engineering. This issue is able to blow up not only the existing economy, but also its ethical foundations; it will also create an entirely new industry.

Our colleagues from Yakutsk, scientists from the Ammosov North-Eastern Federal University, are carrying out a unique project for cloning a mammoth. The Yakuts are very far-sighted people. Over the past thirty years, they have invested in the reconstruction of the tundra ecosystem, trying to make it similar to the one before the ice age. The aim of the project is to include the territory of Yakutia in the economic cycle. They are fertilizing the soil to stimulate the emergence of new types of plants. If they manage to clone a mammoth, we will see a completely different branch of agriculture in a hundred years.

We all have different forecasting time-frames. In Russia, we live for today. Can we make forecasts?

I am a historian through my first education and I can say that Russia is a country with an unpredictable past, but not with an unpredictable future. And, honestly, I would say that from my point of view, the future of Russia, as well as its past, can be hardly subjected to analytical scrutiny. More than once its history could have ended sadly, but the country survived and revived. This can be explained only by the belief in the reality of miracles and it is with this belief that we should look into the future. Aside from that, I am an absolute materialist, but as to the history of our homeland, I prefer to believe in miracles.

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