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President of Russia Dmitry Medvedev: Colleagues, we are meeting today to talk about a project that is among our priorities, which we have discussed at length, but which, unfortunately, is not moving forward. I am referring to the modernisation and technological development of our economy, its innovative development.

I am not going to be verbose; we have already defined all our priorities, including those in the major programmes that are planned decades in advance.

Our main problem is that despite having all the right programmes in place, there have not been any significant changes in the technological advancement of our economy. This is particularly evident now, during the global financial and economic crisis. So far, we have not seen any serious results from the small firms that we have been trying to establish, the research and technology parks, the various centres for transferring the new technologies that we are trying to use, the Russian Venture Company, or from technology development special economic zones. To be completely frank, most of these things exist mainly on paper.

The state of innovative activity at industrial companies (where all of this work needs to take place) is not only stagnating, but in many cases, actually getting worse (although this is partially due to the crisis). Inefficient labour management, outdated equipment, and poor business process logistics are all having a negative impact.

At the same time, we must not forget one simple, unfortunate fact: the labour efficiency in our country is currently equivalent to only one quarter of the labour efficiency in the United States. This should be one of the most important indicators motivating us to work harder.

Often, companies that are allocated budget funds for innovation do not use it to promote their own innovative development. Instead, they simply use it to pay for innovative activities that they should be funding with their own budgets. This is not what we are aiming toward and allocating funding for.

On a country-wide level, resolving all these problems depends first and foremost on the competence of the businesses themselves. The organisation of business processes is a separate topic, one that we should also discuss.

Now, I want to talk about the measures that we must take.

First, we clearly understand that most problems today do no occur in the creative phase, but rather, while distributing the new product – in other words, during commercialisation or scaling. Up to 90 percent of today’s production could be increased by replacing outdated and low-capacity equipment with modern models.

The situation is also difficult within companies and universities that are supposed to be doing scientific research. In my view, the quality of that research is not satisfactory. The research and development spending figures are also alarming. Our companies are spending six percent of their total budgets on research and development, whereas companies in leading innovative nations are spending significantly more: 75 percent in Japan, about 70 percent in the United States, and 25 to 65 percent in EU member states. So, you can see that we are spending very little. If this continues, we will not get any results, because without money and investments, no real progress can be made.

One of our main problems is that we do not have an ‘implementation zone’ consisting of small and medium-sized enterprises. Clearly, without creating a zone of this kind, it is impossible to react strategically to technological changes and new innovations. And in general, as I’ve said before, our businesses are not at all motivated to engage in this kind of activity. They simply do not want to do it. I feel that this is not just a question of tax breaks, although that is important as well, and constitutes an issue we should reflect on further. This is also a problem of attitude.

We need to discuss how we can change people’s attitudes, because if they do not change, then we can look forward to a dismal future.

I would like to say that the problem of modernising the economy – developing an innovative economy — should no longer be regarded as abstract. We cannot allow ourselves to simply state it as an abstract priority while doing nothing. I want to emphasize again that unfortunately, our lack of action up until now has not given us the necessary results. I agree that work on this problem must be entirely practical, addressing specific areas and sectors such as medicine, biotechnology, energy technologies, energy conservation (energy conservation should be addressed not as a general topic, but by working on specific problem areas such as housing and utilities), and energy technology as a whole. We need specific proposals. Only then will we have a chance of success.

We understand that the technological development of our economy is probably the most pragmatic, but also the most difficult of our state priorities, as outlined in our strategic programmes. For this reason, I feel that it must be supervised by the President. I will create a separate commission and we will work regularly with the Cabinet and the Federal constituent entities, with support from experts in the field and, I hope, with widespread involvement from Russian businesses.

Let’s begin discussing this topic.