2.1. Increasing Role of Knowledge for Development
2.2. Overview of Specifics of the Russian Situation Regarding Information Society and Knowledge Economy Development
2.2.1. Specifics of the Economic Situation
2.2.2. ICT Infrastructure and Use in Key Spheres of Activity
2.2.3. State Regulation and Business Climate
2.2.4. Human Capital
2.2.5. National Innovation System
2.1. Increasing Role of Knowledge for Development
The present time can be called a period of knowledge revolution, when the ability to produce, receive, and apply knowledge becomes the key factor of the socio-economic development and international competitiveness. The role of knowledge is significantly increasing; the information and communication technologies (ICT) and life-long learning play an important role in its acquisition and use. A good reflection of this fact is the developed countries' "investments into knowledge" (R&D, education, ICT), which are catching up to the investments in the fixed capital.
Processes related to the knowledge revolution are of importance both for the developing countries and countries in transition. Since the world economy grows ever more dynamic and competitive, each country faces the necessity to develop its own strategy for knowledge utilization to increase efficiency of traditional industries, develop new industries, and support such pace of development that would allow to gradually reach the leaders.
The experience of the countries developing most successfully and dynamically shows that the following conditions determine favorable economic development:
- Competitive economy stimulating the growth of production efficiency;
- Financial system stimulating optimization of financial investment flows;
- Flexible labor market stimulating the improvement of personnel qualification;
- Efficient and transparent government system;
- Regulatory and legal environment favorable for business activity; and
- Active system of social protection facilitating citizens' adaptation to continuing structural shifts.
In addition to the above, the successful development of the Knowledge Economy, which forms the basis for the Information Society, requires the following elements:
- Creation of economic and institutional system promoting efficient use of the present information resources and creation of new ones;
- Increase of the educational level, developing a system of training the qualified personnel;
- Development of dynamic infrastructure of information processing and transfer; and
- Efficient national innovation system.
The effective use of knowledge in all sectors of the economy and social life becomes the priority task. Its achievement demands improved coordination between the governmental policy and societal institutions and civil society forces, between developing technologies and people's mentality. The ultimate goal is improving the standard of living by providing access to knowledge for all social groups from governmental officials to housewives.
2.2. Overview of Specifics of the Russian Situation regarding Information Society and Knowledge Economy Development
2.2.1. Specifics of the Economic Situation [5]
The review of the past four years demonstrates that the tendency of growth of the Russian economy (the domestic economy grew 5.8 percent annually on the average or over 25 percent during this whole period) is weakening. Further exploitation of the growth mechanism based on the flow of "cheap" petroleum money and post-crisis ruble devaluation will not provide the sustainability of the economic growth.
The reforms of the past four years allowed the government to resolve a number of problems, which were the focus of previous program documents of the Russian government:
- Important legislative acts were adopted (package of tax laws, Labor Code, Land Code, etc.);
- Several reforms were initiated, including the pension reform, railway transport reform and electrical energy industry reform;
- Some progress has been achieved in the sphere of eliminating excess administrative pressure on business; and
- There has been progress in negotiations on Russia's participation in the World Trade Organization (WTO).
The effectiveness of the Russian reforms as well as the macroeconomic stability are proven by the gradual increase of Russia's credit rating and acknowledgement by both the European Union and the USA of Russia's status as the country with market economy.
At the same time, Russia continues to face serious socio-economic problems, which signifies of the instability of economic growth and results achieved recently. Russia's level of economic development remains unacceptably low. The GDP per capita is slightly over seven thousand USD at purchasing power parity and less than 2.5 thousand USD according to the current exchange rate. These numbers are several times lower than the indicators not only for the leading but also for the considerable part of the developing countries. This results in the low quality of life with high rate of differentiation of the citizens' income and unacceptably high share of people below poverty line.
Several major problems limiting the country's economic growth can be identified:
- The present state of market institutions and infrastructure sets high level of expenditures on the domestic economy;
- Governmental interference into the economic activity remains excessive and disruptive;
- In terms of implementing efficient foreign trade policy, the Russian economy remains essentially closed due to excess customs and currency regulation and control as well as lack of harmonization of the Russian standards and international foreign trade standards;
- Level of taxation of entrepreneurial activity remains very high, which significantly slows down the increase of investments and general economic growth;
- There is no effective law enforcement system in the country; and
- Inefficient system of social services combined with low salary levels impedes normal reproduction of human capital.
The economic structure remains deformed with the raw energy materials and transport sectors representing the dominant areas. Given the absence of adequate inter-sectoral flow of capital, such imbalance preserves the lagging position of processing and service sectors and complicates the task of modernizing the economy. There are major deficiencies in the regulatory environment, including the sphere of export policy, competition stimulation, resistance to corruption, and protection of people's personal contribution to the global knowledge.
If the current pace and structure of growth remain the same, Russia will not be able to reach an adequate standard of living in the next decade. The sustainable economic growth is only possible in the conditions of diversification and increase of investment activity.
2.2.2. ICT infrastructure and use in key spheres of activity [6]
Over the last two years Russia witnessed high pace of growth in the ICT sector: this segment of the Russian market is among the fastest-growing in the world. At the same time, Russia still spends less than the developed countries on the ICT. The country takes one of the last places in Europe in terms of ICT investments surpassing only Ukraine and Romania. Such strategy does not create favorable economic conditions for the development of ICT infrastructure and application of ICT. Some estimates state that Russia is at least five years behind the leading Western countries in the level of ICT development.
Russia also takes one of the last places in Europe in terms of telephone density, but this gap is gradually narrowing. The following problems remain urgent: unequal distribution of phone penetration throughout the country, substandard technical level of the Russian fixed-line telephone communication networks, and monopolized markets of local, intercity and international communications.
There has been an intensive growth in the number of mobile communications subscribers recently, especially in the Russian regions. The Volga, Ural and Siberian federal districts are among the fastest growing regions in this regard. The disproportionate distribution of cellular communications in Russia is even more obvious than in the case of fixed-line telephony. Cellular communications market is characterized by high competitiveness which results in lower prices and extended the range of services. The period of 2001-2002 clearly showed the tendency of consolidation of cellular communication companies; several of them turned to national or regional operators as a result of mergers and developing of their own networks. The mobile Internet access has not been sufficiently developed in Russia so far.
The cable television networks providing possibilities of high-speed Internet access, interactive television and a number of other services are less common in Russia than in Western European countries and considerably less than in North America.
The number of Internet users in Russia in 2003, according to the data obtained by the Public Opinion Foundation, amounted to nine percent of adult population of 18 years and older, which corresponds to the indicators of the leading Latin American countries but is much less than in the developed countries. There are also considerable interregional differences. The number of people accessing the Net from home is growing faster than the number of corporate users; at the same time, the corporate customers do and will continue to shape the income from access services in the following five years.
The broadband access was adopted in Russia at a later time; therefore, the majority of individual users still access the Internet via fixed telephone landlines. Among the major tendencies of Internet development are sustainable growth of subscribers base, introduction of new access technologies by providers, expansion of the range of operators' services, development of the system of community access (for instance, as part of the Kiberpocht@ program.)
The monthly fee for local telephone in the Russian cities is rather low, and it does not impede using dial-up Internet access unless the countrywide system of time-scale payment will be established. At the same time, the prices of Internet service providers remain rather high relative to the income level, which naturally limits Internet access from home.
The digital divide, which can be clearly observed in the sphere of Internet use, represents a serious and urgent problem for Russia. According to the data of sociological polls, the Internet audience in Russia is represented mostly by young, male, educated, rich, urban users, which diverges substantially from the general population structure. The average income per family member using Internet in Russia is twice as high as the same number for those not using the Internet. The widest digital gap is reflected in education and age parameters. For instance, the share of people with higher and unfinished higher education among Russian Internet users is three times higher than the corresponding share in the general population.
As for the ICT application in the key areas of the Information Society and Knowledge Economy development, the situation can be summarized by the sector as follows.
Education sector . The level of ICT infrastructure development in the Russian institutions of higher education is in general in line with the average European indicators. Government and private business helped to create a large-scale system of teacher training and ICT application in the educational process. Informatization of education became a priority for the governmental policy since 2001; the governmental programs aiming to create basic prerequisites for introducing modern technologies in education were adopted at the federal and regional levels.
Nonetheless, the current state of the ICT use by the Russian educational institutions is characterized by a set of problems, which require coordinated efforts of public authorities and the society in general. These problems include unacceptably low levels of computerization and Internet access in schools (especially in distant and rural areas) and introduction of broadband Internet access on all educational levels; inefficient use of existing educational ICT infrastructure; deficit of educational software tools, specialized Internet resources, educational courses on the basis of ICT; teachers' reluctance to use ICT in the educational process, lack of corresponding methodological materials.
Bridging the digital divide among the higher and secondary education levels, development of network infrastructure in educational institutions, creation of educational e-resources and tools, methodological training for ICT use by teachers in educational processes – all these issues are included in the agenda of the next stage of ICT use in the education process.
e-Government . The issues of creating ICT infrastructure for the government authorities have been chiefly resolved. The federal and regional information systems have been implemented and function successfully. However, several key problems should be taken into account: there remains a weak system of data exchange between different state offices; the overwhelming majority of governmental information systems and databases are closed for external access and are used for departmental needs only; the interaction of public authorities with the citizens and economic agents is a one-way communication channel of general information present on the web sites and departmental gateways; the pilot projects of electronic two-way interaction are very rare.
e-Business. Different forms of e-Commerce are actively developing in Russia today. Retail e-Business turnover ("business for customer" model) shows the tendency towards fast growth. Intercorporate e-Business turnover in the Internet ("business to business" model) doubles annually. The environment in the country favors further development of different forms of e-Commerce: the Internet audience is growing fast; the adoption of the Federal law "On Electronic Digital Signature" forms the basis for legal regulation of electronic transactions; federal program "eRussia" covers a number of events aimed at promoting e-Business; there is human potential for ICT use for developing different models of e-Commerce; changes in the Russian taxation system stipulate transition to transparent forms of transactions, wage payment, etc.; the share of monetary forms of payment between enterprises is growing, which is an important factor of intercorporate e-Business development.
It should be noted, however, that e-Сommerce development in Russia is still at its early stages and its role in the economy is very low. There are also a number of factors impeding its development: low level of Internet penetration in Russia, insufficient development of telecommunications infrastructure of the Russian market, lack of adequate legislative basis in the sphere of e-Commerce, low level of credit card penetration, few convenient and secure systems for Internet purchases payment, low mutual trust among market players. In addition, the entrepreneurial and managerial culture of the Russian business is not very high as well as the levels of business processes automation in Russian enterprises.
2.2.3. State Regulation and Вusiness Сlimate
Over the last several years, Russia has been actively shaping an information policy including such tools as legislative environment, governmental programs for ICT use and development, and adoption of strategic documents. At the same time, there are many problems impeding further development of the information environment:
- There is no comprehensive governmental policy ("national strategy") of the Russian Federation in the sphere of Information Society development, although there were attempts to draft the concept of national strategy " Russia in the Information Age." Separate elements of the policy (strategy) in the sphere of information technologies use and development are present in the documents of the federal level bearing non-normative nature (adopted in 2000-2002) [7];
- Although present, the normative base of the "information legislation" of the Russian Federation is rather fragmentary; there are substantial gaps, and the majority of normative acts are obsolete; special normative acts of the federal level were adopted in mid-90s, they need to be updated; the adaptation of "general" Russian legislation to the reality of the Information Society is very slow;
- Legal status of the information as a separate object of normative regulation is not finalized in Russia; the notion of 'information' is not defined, the specificity of regulation of the corresponding legal object is not fixed; although the notion of 'information resources' is introduced legally [8], the description of their legal status makes them resemble the items of property (tangible objects) of the right of ownership, however, according to the meaning of the law only documentary information can be attributed to such resources, while the absolute majority of information circulated in the information and telecommunications information systems does not have documentary form;
- Although intellectual property protection mode in the Russian Federation formally corresponds to the foreign regulation practice, its weak component is an imperfection (in some instances - total lack of development) of procedural and law enforcement mechanisms that can be legally fixed only in the criminal, administrative and procedural law - that is outside the limits of "information" legislation;
- Although e-Business ("e-Trade" or "e-Commerce") has existed in the Russian Federation in the embryo state for a long time, there is no special legislation regarding this area; as a result, the possibilities of conducting business in the electronic form are strictly limited due to the absence of any normative guarantees that the transactions be legally accepted - contrariwise, federal law on electronic digital signature (EDS) is actually discriminating electronic forms of business by introducing highly complicated and financially heavy procedures of EDS application for identifying the participants of electronic (network) economic turnover;
- The issues concerning electronic interaction between government and society, governmental bodies and citizens ("e-Government") have surfaced recently and have not been legally resolved so far; currently being developed are a number of legislative documents on "e-Openness" of the public authorities, on the order of citizens access to the information on governmental activity and adopted legislative acts, etc. This work was initiated as a result of adoption and implementation of "eRussia" Federal Program, although the activities still cover only an initial (informational) aspect of electronic interaction with the government - providing access to the governmental information resources, while interactive cooperation between citizens and organizations and public authorities via information technologies is still a matter of distant future;
- During the last few years the Russian Federation adopted a considerable number of legislative documents aimed at liberalizing the telecommunications market (in particular, due to the anticipated entrance of the RF into the World Trade Organization). At the same time, antimonopoly policy in the sphere of communications has not been formulated, and the regulatory measures are randomly applied by antimonopoly institutions. There is no agreed upon practice of their implementation; moreover, there is a contrary tendency towards strengthening, at least temporarily, of the monopoly of "traditional" operators (with considerable governmental share) in the key segments of the market. Same tendencies can be observed in the new version of the Federal law "On telecommunications" adopted in 2003;
- The situation with licensing communications services is very complicated and ambiguous; the list of licensed types of activity in the sphere of telecommunications is not legally fixed; the existing (often contradictory) normative acts do not provide straightforward answers to the questions of which services are licensed and in which order; process of issuing licenses and permissions for exploitation of telecommunications objects is highly non-transparent and ineffective from the financial and organizational standpoint. There are no normative rules for the majority of services, the corresponding acts are adopted in arbitrary order and bear individual influence ("supplements to licenses" can be unilaterally changed by the licensing authority at any time.) A number of activities (for example, the use of radio-frequency spectrum) need obtaining at least two licenses, which includes dealing with other governmental authorities (for example, for the TV and radio broadcasting activity).
In terms of the business climate, there are a number of positive changes in the Russian economy, favorable for the country's development:
- The economic growth continues and tax levies are growing, which increases consumer demand of commercial enterprises and public sector on information products and services;
- Real cash income of the population is growing [9],
- which favors citizens' expenditures on ICT and information.
At the same time, a number of business climate parameters bear negative influence both upon the development of goods and services production in the sphere of ICT and their consumption in different spheres of activity:
- Russia remains a country with high administrative barriers [10];
- Russian legal system does not provide sufficient protection of property rights - illegal seizure of property is widespread [11];
- Notwithstanding attempts to cut taxes, tax load is still very high, which is extremely unfavorable for the development of high-technology enterprises, including the ICT sector;
- Access to financial resources necessary for the innovative activity of enterprises both in ICT introduction and development of competitive ICT production is insufficient due to the underdeveloped banking system, stock market and venture financing.
2.2.4. Human Capital
A country's ability to participate in the development of the global Information Society is largely determined by the presence of necessary human potential - high educational level, people's ability to collect, process, and efficiently use digital information, etc. Russia is very rich in human resources and has a high potential. In this regard, it has advantages for the Information Society and Knowledge Economy development:
- Traditional accessibility of education at all levels, high quality of education materials and of the process itself, containing base technical and general knowledge and skills, current situation, and orientation towards development of creativity;
- Major indicators of educational level position Russia among the economically developed countries. These include the share of people with higher and unfinished education and scientists in the economically active population (20% and 1.37% respectively), the number of students per 1,000 population (56), etc.;
- Growing number of students in the sphere of ICT, their share per 1,000 population is at the level of such countries as France, Sweden and Germany (although considerably lower than in Finland and Ireland - countries with export-oriented developed ICT sector);
- According to the poll conducted by the Institute of the Information Society together with the Higher School of Economics in 2002, over 35 percent of economically active population in Russia have (28.5%), acquire or are going to acquire computer skills in the nearest future;
- Considerable share of economically active population use personal computer for work (25% according to the above poll), which is lower than average European value (45% in 2000), but, taking into account the level of economic development and country's computerization, is a rather high index.
At the same time, there are a number of problems of human potential development as a factor of information development:
- Notwithstanding the remaining high average education level with considerable share of technical students, there is no optimum balance of different educational levels;
- There are a relatively small number of people with PC skills in Russia - 5.6 percent of economically active population (in contrast to the EU, where their share was 22.8 percent in 2000). Russian employers spending less time on PC training for personnel than those in the developed countries;
- Weak links between education system and labor market cause the so-called ‘brain drain.' According to international organizations, the flight of specialists in ICT is estimated at 3.6 points (according to seven-point scale), at the same time the maximum estimate for the affluent countries - like USA and the Netherlands - is 6.7 and the minimum of 2.2 points is in Romania;
- Specialists and scientists are leaving science and higher educational institutions for other spheres of activity and to emigrate abroad as well as the overload of the remaining specialists with additional work have negative influence on the educational level and scientific research in the areas crucial for the Information Society development;
- The system of education and personnel training in Russia is not flexible enough to adequately and promptly react to changing conditions: there are issues concerning people's readiness to adapt to the new conditions after the change of qualification - there are difficulties due to the set mentality and objective lack of possibility of further and life-long education.
2.2.5. National Innovation System
An important prerequisite for the creation of promising national innovation system is the access to the global stock of knowledge, creation and adaptation of knowledge for domestic needs. Russian situation is characterized by the following features:
- Russia has big potential in the innovation sphere: it is one of the world leaders, but there is an imbalance of innovative high technologies being present in each sector but not widespread in the overall economy. The innovation activity of the Russian enterprises remains very low [12];
- Science and technology have great potential in Russia, the share of specialists and scientists is high: Russia takes one of the leading positions in this area, but research intensity of the Russian economy lowered drastically in the recent decade; this can be partly explained by insufficient governmental and private investments in R&D [13],
- fundamental and applied research, breaking ties between research institutes and production. This also impedes widespread dissemination of knowledge accumulated by advanced enterprises via supplies of new equipment, technical and information services;
- Level of access to the knowledge accumulated worldwide [14] and efficiency of its utilization in Russia remain rather low, which can lead not only to information poverty but also to poverty in general;
There is a threat that Russia will fall hopelessly behind the developed countries if it does not strive to improve access to the global information wealth while wasting its own scientific and technical potential. In order to prevent this, a reform of scientific and educational sector should be carried out in accordance with the economic needs, in particular, new programs of professional retraining and adult education should be developed and implemented overcoming inertia of old organizational structures. The problem of brain drain should be resolved on the national level. The problem of fulfilling the ICT potential and introducing new infrastructures can be resolved only on the national level.
|
