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First, the EU frame programs are intended to strengthen the European scientific field rather than development of the CIS countries. Second, Russia is incapable to equally par ticipate in contests with the Western European countries. Russian bidders still remain less competitive in formulating a research plan, project management structure, delegation of responsibilities between researches, indicating relationship between them and organiza tions participants, as well as describing the expected findings. This is why Russia has achieved a miserable success in contests as part of the Sixth Frame Program: success co efficient averages nearly 12%.

At the background of reduction and reorganization of foreign organizations and funds, pooling of foreign and domestic monetary funds, including private ones, could be a rational decision. It is this approach that was selected by the New Eurasia Fund which be gan to operate late in 2004.

New Eurasia Fund was established as a partnership project including Russia, the United States and Europe. Russian Dynasty Fund and European Madariaga Fund (headed by J. Solana, Representative on Unified Foreign Policy and Security Policy of the European Union) and American Eurasia Fund are cofounders of New Eurasia Fund. The latter oper ated in Russia between 1993 and 2004, and its new fund became a sort of entry strategy.

Basic goals of New Eurasia Fund are to support and strengthen civil society in Russia as well as promote countrys integration into the world community of small business, in cluding support to scientific and innovative projects. Funds budget will total more than $10 million annually.

RUSSIAN ECONOMY in trends and outlooks 3.5.7. HR Related Problems in Science In 2004, the brain drain problem came alive again to become a topic of discussion along with measures to be taken to prevent the corresponding loses and prevent young scientists from looking for a job in other countries. The concern of the HP related problem is somehow substantiated: little has been done to improve the situation of young scien tists, young generation of scientists continues to be uncalled, some of them having to search for a job in other countries. The polls conducted in 2004 by specialists of the Sci ence of Science Center of the Institute of History of Science and Techniques under the RAS jointly with sociologists of the Institute of Economics and Industrial Production Or ganization showed an increased disintegration in the scientific community. Only 5% of the scientists have a business sector income (i.e. $500 and more)25. This group of well paid scientists consists mostly of researches at the age of 35 to 50. Earnings of the rest of the scientists are comparably lower. Additional earnings are gained mainly though research work (grants of various funds, contracts and agreements with customers) and professor ship. Nevertheless, there is a positive trend: only 8% of scientists has non science busi ness as a principal earner. The figure is less than that of the mid 90 when up to 70% of researches were engaged in non science business26.

At the same time, simultaneous work in various projects, and most often in various organizations, results in poor scientific output, because there are no adequate conditions available for serious research work. This phenomenon was reflected in statistics: over the last three years, a share of Russian authors in the global scientific literature was reduced from 3.6 down to 2.4%27. In addition, Russian scientists are poorly engaged in the global scientific community: according to the Institute of Psychology under the RAS, only 39% of Russian researches are participating in international programs and projects28. According to polls, 56% of scientists are not expecting changes in their earnings in the years coming.

Such situation is not attractive whatsoever for young scientists, and nearly 1/3 of them have plans to find a new high paying job in the nearest 3 years.

In February 2004, the Council on Science and High Technology under the RF Presi dent held a meeting dedicated to the issue of human resources for the research and tech nology center of the country. Implementation of a Presidential Program on Scientific Hu man Resource of Russia was expected to be commenced as a result of this meeting, which would have provided for a set of measures aimed at retaining human resources in the field of science, including initiatives on increasing wages and introducing a system of soft term crediting of housing construction for young scientists29.

However, the meeting resulted only in a Decree of the RF President On Measures of Supporting Employees Engaged in the RF Defense Industry. Pursuant to this Decree, from March 1, 2004 nearly 400 scientists, designers, technologists and other engineers employed at organizations executing state guaranteed orders and having prominent ser vices to the cause of manufacturing armaments, military and special purpose equipment, received monthly stipends to the amount of RUR20 thousand. Thus, resolution of the HR related problem boiled own to the repeatedly tested measure, i.e. selective and temporal salary increments for special group of employees.

The sample included 786 persons from various regions of Russia. Refer to : Yurevich ., Tsapenko I., Prikhodko ., How and How Much Do Our Scientists Earn // Naukovedeniye. 2004. No. 1., P. 58.

Yurevich ., Smart but Poor: Scientists in Modern Russia. .: NF, 1998., P. 104.

Saltykov B., Designing the Future of Russian Fundamental Science // www.opec.ru/point_doc.asptmpl=point_doc_print&d_No.= Yurevich ., Passive Integration // Nezavisimaya Gazeta Nauka, 12 January 2005, P. 12.

For more details on the draft program refer to: Russian Economy in 2003. Trends and Outlooks. Issue 25. .: IET, 2004. P. 261.

Section 3.

The real sector As far as the brain drain concerns, it is not considered as totally negative by the gov ernment, since migration of Russian scientist to other countries falls within limits of common migration. Such opinion, however, is argued by many opponents who believe that losses in curred from brain drain are enormous emigration of a single Russian specialist to other county incurs losses of $200 to 250 thousand, which is totaling $25 billion on average.

The issue of brain drain still remains accompanied by various kinds of myths. This is somehow related to the lack of reliable statistics on emigration. There are frightening data showing that 60% of the winners of international scientific Olympiads are getting employed in other countries, and Russian emigrants in the United States provide 20 to 25% of the US high tech production.

Russia would have incurred approximately $7,5 billion losses in total over the last thirteen years of post Soviet emigration on the assumption that the cost of a single spe cialists emigration to other country was really $200 to 250 thousand (this amount is probably calculated by using the cost method proceeding from the assumption that if a young specialist stayed in Russia, his/her monthly production output during his/her career would amount to $500), and on the basis of official statistics and polls showing that the Russian community in other countries is 20 to 40 thousand persons. no doubt, this figure is far below $25 billion which is most often referred to in mass media.

Furthermore, by referring to the official statistics, we can see that scientists account for not more than 2% of the total emigrants. Thus, the threat of brain drain is fairly over stated, though emigration of single specialist may shut down a particular research as a whole. Nevertheless, such cases are very uncommon, since emigration has become younger. In addition, external factors that constrain emigration have become stronger. The United States where the majority of scientists emigrate to imposed heavy restrictions on obtaining entrance visas in 2004. The number foreign scientists obtained US entrance visas reduced to 65%30 over the year.

At the same time, the Russian scientific community abroad is actively engaged in stimulating inflow of young Russian scientists. On the one hand, Russian scientists em ployed at foreign laboratories are trying to support their former compatriots in obtaining grants and entering into contracts on research and development. On the other hand, they monitor and select best students to offer them a job in the future. The scale of such chan nel has not been measured yet, but it is widely used indeed: those scientists who are cur rently employed abroad used to work at almost all leading Russian research institutes, and they still maintain relationship with their parent organizations.

More intensive is emigration of young scientists from highly potential research teams. For example, outflow of young scientists from scientific and educational centers established at Russian higher education institutes under the auspices of the Ministry of Education and the American Fund of Civil Research and Development accounted for nearly 7% over the last two years, which is notably beyond the overall average in the country.

Brain drain is less evident at some very few research centers where all inclusive conditions have been created to retain young scientists: stable financing with public and foreign sources, sustained relationship with foreign scientific centers, constantly upgraded scien tific equipment, career motivation for young scientists.

In order to discourage scientists emigration, it is essential, besides pay increase, to develop a system of additional science financing. Globally, business sector is considered the key source of financing science.

Business Week. October 4, 2004. P. 62.

RUSSIAN ECONOMY in trends and outlooks 3.5.8. Expanding Business Participation in Financing Research and Development Last year businesses continued to pay more interest in supporting research and development. The support was mainly based on two forms of financing :

establishing their own research and development units or institutes ;

financing research projects implemented at public scientific organizations and higher education institutes.

Official statistics on innovations in industry (including research and development fi nancing) typically remain very scarce. At the same time, analyses made by some large com panies are testifying to the fact that business sector has become more involved in research and development financing, which, however, remains selective by industry so far. At present, annual research and development expenditures by Russian Railroads, RAO Unified En ergy Systems (RAO EES) and Gazprom amount to RUR15 billion31 which account for nearly 1/3 of the public allocations on civil science in 2004, while research and development expen ditures by Norilsk Nikel exceed by 2.5 times those of the Moscow State University32.

Several notable initiatives on research and development financing were advanced by businesses last year :

System Joint Stock Corporation and the related companies (RTI Systems Concern, Scientific Center Concern and Telecom System) announced about conclusion of a master agreement with the Moscow Bauman Technical University and the Institute of Radioelectronics under the RAS. Under the terms and conditions of the agreement, the companies and higher education institutions will jointly develop innovation infrastruc ture and implement promising research projects, including expert examination of re search and technology developments with a view to utilizing them in commercially promising projects as well as obtaining patent protection on the developments in use.

The RAS Siberian Affiliation and the Krasnoyarsk Mining and Chemical Plant entered into an agreement for a period between 2005 and 2008 at total value of RUR25 million.

Six research institutes of the RAS Siberian Affiliation will participate in research and de velopment for the benefit of the plant.

An agreement concluded between the RAS and Norilsk Nikel was continued. A Norilsk Palladium Research Center is scheduled to be established on the basis of the United Institute for Catalysis under the RAS, which will implement a research program aimed at creating competitive science intensive materials that could be used in indus try. At next stage Norilsk Nikel is ready to play a role of a seed capitalist and continue to support successful projects on a long term basis.

A private High tech Center was opened in Khimki city. The Center is intended to de velop new medical remedies for AIDS, cancer, cardiovascular and other diseases. A share of foreign investments accounts for nearly $5 million. Research personnel of the Center is expected to reach 1500 persons at mean age of 38.

Development of research and innovation activity has become essential for industrial enterprises: according to a poll conducted by the IET33, 72% of enterprises have outdated plant and equipment, which makes their products less competitive.

More business involvement in research and development projects, establishing new research units and providing more direct orders to research organizations would play a significant role at the background of actual stagnation of the Russian Technological Devel Ideological Bargaining // Rossyiskaya Gazeta. January 23, 2004.

Poisk. No. 2 and 3. January 21 2005. P. 8.

IETs poll. No. 145. May 2004.

Section 3.

The real sector opment Fund (RF TDF) which is supposed to support implementation of inter sectoral pro jects on the basis of extra budgetary research and development funds.

Extra budgetary sectoral funds were built up by ministries, public agencies, con cerns, corporations and associations on the basis of contributions made by enterprises as 1.5% of their products (works, services) cost. The budget of the RF TDF was based upon 25% contributions from extra budgetary funds. Soon after Chapter 25, Part 2 of the RF Tax Code entered in effect and a series of amendments were made to it, extra budgetary re search and development funds began to be based on voluntary contributions of enter prises, up to 0.5% of gross profit. The changes in the procedure of contributions to extra budgetary research and development funds implied actually an almost double reduction of contributions to the RF TDF (by industries which make such contributions). As a result, in 2004 the RF TDF had enough money only to be able to comply with its obligations under previously concluded agreements rather than finance new projects.

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