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In the academic sector of science, the fundamental principles of future trans formations were laid down by the amendments to the Federal Law On science and state scientific and technological policy, which were adopted in December last and introduced certain changes into the principles of functioning to be applied to the academies of sciences with the state status. Now, the academies of sciences have become state not for profit organizations. Accordingly, the Charter of the RAS is to be approved by the RF Government on the recommendation of a general meeting of the RAS, while the President of the RAS will, as before, be elected by general meeting, but the appointment to that post is to be approved by the RF President. The state academies of sciences will have to submit to the RF President and the Government annual reports on the situation in Russian science, reports on their scientific and organizational economic activities, and proposals concerning the priority directions for the development of science. These measures are de signed to increase the transparency of the academies activity.

At the same time, the regulation of financial flows and property have remained unchanged, although the Law does introduce certain formulations that may be in terpreted as a preparatory stage before the onset of more serious reforms. In par ticular, the funding from the federal budget for fundamental research will be allo cated to the state academies of sciences in accordance with the fundamental research program, and there is no indication in the Law as to how the financing effectuated within the framework of this program will be combined with the basic (by estimate) financing of research organizations. In accordance with the Govern Frascati Manual. Proposed Standard Practice for Surveys on Research and Experimental Devel opment. OECD, 2002, p. 221.

For more details concerning Federal Law of 3 November 2006, No. 174 FZ, On autonomous insti tutions, see Annex 1 of this overview.

RUSSIAN ECONOMY IN trends and outlooks ments assignment concerning the Laws implementation, the draft fundamental research program will be elaborated jointly by the Ministry of Public Education and Science, the Ministry of Public Health Care and Social Development, the Ministry of Agriculture, the Ministry for Regional Development, and the Ministry of Culture in cooperation with the RAS and the other five state academies. This will mean the strengthening of the role of the Ministry of Public Education and Science and other ministries in the activity of the academies.

Simultaneously, the state academies of sciences will retain their right to de termine independently the number of staff and the system of remuneration in their subordinate organizations, the main directions for spending their received funding, while the reduction of staff numbers in the academies and their subordinate organi zations cannot be used as the grounds for reducing the amount of funding allo cated to the state academies of sciences in the federal budget for a current and the following years.

Thus, so far the innovations that have been introduced cannot be regarded as revolutionary: the candidacy of the President of the RAS, indeed, has always had to be coordinated with the RF President and the Government. The coordination of the content of the Charter may create certain difficulties for the Academys Presidium, but the fundamental financial and property aspects of the RAS activity have al ready been established in the amendments to the Law on science.

Last year, little attention was paid to branch science at the government level.

Discussions would periodically arise only in respect of the issue of the reorganiza tion of the network of state research centers (SRC), the majority among which be longed to the field of branch science. However, the effectively revised list of SRCs, which now contains 51 centers instead of the former 58, was submitted for the consideration by the Interdepartmental Commission for Scientific and Innovational Policy only at the very end of December. Later on, it is intended that the role of quantitative indices in the selection of SRCs should be increased, with the estab lishment of their threshold values. Besides, proposals have been put forth that the organizations, to which the status of a SRC is to be granted, should be ro tated61. During all these discussions, one important issue has been overlooked that of the present significance of this status. It should be remembered that the status of a SRC was introduced in the early 1990s in order to preserve, in the situa tion of crisis, some of the then existing branch institutes with unique material base.

Nowadays, there is no crisis in the sphere of budget financing, and substantial funding is allocated to the programs, and so there exist no real grounds for pre serving this status as such. Moreover, past experience have shown that the grant ing of such a status did not help in maintaining those institutes, to which is had been granted, as the leading ones in their respective fields, and they began to de velop along very different lines.

In effect, there occurred a natural destruction of the formerly existing branch science, while no sufficient stimuli existed for the development of research and de velopment departments within commercial companies. All this has resulted in the Poisk, No. 1, 12 January 2007, p. 4.

Section Social Sphere shortage of organizations actually capable of turning the results of applied studies conducted by the institutes of the government sector into actual developments and into finished products. The crisis in the branch science may also have its impact on the situation in fundamental science, because it quite often happens so that the problems being solved by fundamental science are actually formulated as a result of applied work. It appears that this problem must be dealt with not by means of re vising the position of the institutes with a special status, but through developing and implementing a system of measures aimed at encouraging the private sector to provide financing for research and development.

In higher educational establishments the restructuring of science was also de veloping very slowly. It took the shape of research institutes being merged with higher educational establishments. The majority of research institutes react nega tively to their being turned into structural subdivisions of higher educational estab lishments. They are afraid of the increased control on the part of the administra tions of higher educational establishments, of the loss of their integrity as research organizations, and of the dispersion of scientific projects among the numerous chairs existing in higher educational establishments. The administrations of the lat ter, in their turn, believe their mergers with research institutes to be a positive step in the direction of integration between education and science. It is expected that positive effect will be achieved due to a closer cooperation between the institutes and faculties. This should result in an inflow of funding into higher educational es tablishments, to be allocated to research and development. At the same time, given that higher educational establishments still preserve their form of state institutions, the opportunities for innovation activity available to the research institutes being merged with them are very far from becoming more advantageous indeed, they are now restricted in such opportunities, because the form of a state institution, coupled with legislation that regulates the activity of higher educational establish ments, imposes serious restrictions on the actual implementation of innovation ac tivity. Consequently, there might be fewer incentives also for conducting research and development. Meanwhile, the strengthening of research activity at higher edu cational establishments remains an important goal: according to the data collected by the Rosobrazovanie, only 13% of the tutorial staff of higher educational estab lishments actually participate in research, while 1015% of the off budget funds of higher educational establishments is allocated to research and development62. The situation may be significantly improved if the ideas that lay the basis of the program for the support of innovation oriented higher educational establishments are effi ciently implemented into practice.

4.5.5. The Formation of a Network of Innovation Oriented Higher Educational Establishments The idea of forming a network of innovation oriented higher educational es tablishments saw in the year 2006 its practical implementation. The initiative aimed at selecting and providing targeted support to those higher educational establish Poisk, 3, March 2006, p. 5.

RUSSIAN ECONOMY IN trends and outlooks ments where various innovation programs are being implemented both in the fields of education, organization and management and in the field of science is very timely indeed. The labor market at present is becoming more and more dy namic, and therefore there exists demand for specialists with new areas of com petence. The growing requirements of employers to the quality of education promote the growing role and importance of scientific research at higher educa tional establishments. So far, according to the estimations of employers, higher educational establishments have been preparing specialists with a satisfactory level of basic knowledge, slightly outdated professional knowledge, and very little competence (that is, the ability to practically implement their acquired knowl edge, communication skills, skills of team work, and ability of self education)63.

The worrying circumstance is that the higher educational establishments esti mate all the above listed qualities of their alumni to be at a much higher level.

From this it follows that either they deliberately overestimate their own achieve ments, or lack proper orientation as to which specialists and with which abilities are now in demand among employers.

During the competition of innovation program, higher educational establish ments were granted an opportunity to make known their most advances ideas and developments, which later may be introduced into the system of higher education at a much larger scale. For the implementation of their plans, higher educational establishments could ask for a sum amounting to between 400 mln and 1 bn rou bles, while at the same time guaranteeing the availability of additional off budget funding for the implementation of their projects in the amount of no less than 20% of budget allocations. By the competitions results, budget funding for the imple mentation of innovation projects was granted to 17 higher educational establish ments.

The initial results of the activity of higher educational establishments within the framework of their innovation programs have made it possible to summarize both the main positive aspects and the problems areas that were revealed during the implementation of this initiative (Table 18).

The main advantage of this program has been the absence of any rigid re quirements to the content of innovation programs and the practical support pro vided to the sprouting advanced ideas, which are being generated at higher educa tional establishments, and not imposed on them from above. This initiative has made it possible to learn the skills of a program based approach and to mobilize the available personnel resources, and also promotes the emergence of new lead ers. It is also characteristic that in the educational programs developed at the inno vation oriented higher educational establishments priority has been given to the notion of competence. Besides, at the innovation oriented higher educational es According to the results of the study of the Analytical Center Ekspert Vuzy i rabotodateli o vy pusknikakh i reforme vysshei shkoly (Higher educational establishments and employers about graduates and reform of the higher education system), conducted in 2005 in cooperation with the V. Potanin Charity Fund and the companies Rusal and AFK Sistema (Source: Ekspert, No. 4, January 2006).

Section Social Sphere tablishments there should appear an impetus for promoting the development of science, since research and development, in effect, represents for them one of the necessary components of strategic development programs. The positive effects go beyond the framework of the habitual activity of those higher educational estab lishments that have become winners in the competition, because the program be ing implemented by the innovation oriented higher educational establishments has stirred the whole higher education community and made other higher educational establishments think of strategies for their own development.

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