Building a Knowledge-based Economy on Nanotechnology Is Not that Easy

I have read, heard and even reported that resource-rich countries that dig a hole in the ground and seemingly pull out money are keen to transition their economies from exploiting natural resources to ones based on knowledge in science and technology.

It makes sense since no matter how you feel about the concept of “peak oil”, fossil fuels are a finite resource. So sooner or later that ATM in the ground will stop dispensing cash.

This reasoning has been partly behind Russia’s huge investments in making itself a player in the field of nanotechnology.

As an outsider I have marveled at the machinations this flood of cash into a Russian nanotechnology initiative has initiated. But I am merely looking in from the outside.

So I was intrigued to read an opinion piece over at Nanotech-Now written by Eugene Birger, Principal Analyst for what appears to be a news service on all things related to nanotechnology in Russia, NanoNewsNet.ru, to see what insights it would offer in Russia’s recent attempts to create a “Silicon Valley” just outside of Moscow. 

The editorial details the progress, or lack thereof, in developing the Skolkovo high-tech hub that was started last Spring. Great expectations for the project were there from the onset since it played to the Russian practice when it was part of the Soviet Union of building large and centralized technology centers.

But as is typical whenever anyone starts flashing billions of dollars around, those who should know better kind of lose their objectivity and ignore obvious obstacles to the success of the project.

For instance, Birger refers to Vadim Malkin, Managing Partner of Transitional Markets Consultancy LLP, who argues (rightly in my estimation) that there seemed to have been a lack of recognition that other regions, namely Portugal, with its tax breaks, or India, with its cheap labor, could offer stiff competition for attracting investors in a technology park.

But ultimately the real obstacle remains oil riches. It’s hard to get anyone interested in investing in modernization projects when oil is forecast to be above $120/barrel.

While strictly speaking the Skolkovo project is not part of Russia’s nanotechnology initiative, it could be indicative of what we can expect from the Russian attempts to jump start their research into nanotechnology.

First you see lots of money being announced, then you see a number of bureaucratic obstacles delaying the release of those funds, followed by high-profile agreements and memorandums of understanding that all lead to far less cash actually being spent than originally announced and MOUs that seem never to be turned into contracts.

Birger references a quote made by Russian politician Victor Chernomyrdin in 1993, which, according to Birger, has become a catch phrase in post-Soviet Russia, "We intended for something better, but it turned out just as it always does."

Time will tell with this dim assessment is applicable to both the Skolkovo project and the Russian nanotechnology initiative, but in any event we know it won’t be easy for them to be succesful.