State of the Federation

"We haven't managed to get rid of the primitive structure of our economy...The competitiveness of our production is shamefully low...Instead of a primitive economy based on raw materials, we shall create a smart economy, producing unique knowledge, new goods and technologies, goods and technologies useful for people."

Dmitry Medvedev, as quoted in the New York Times 11/12

Last year George Will wrote that Russia still has "essentially a hunter-gatherer economy."  While hyperbolic, the characterization is not far off.  In the 1940s the USSR developed the T-34 tank, indisputably superior to the frightful German Panzer, and used it to drive the Nazi Army from its soil.  In the 1950s it beat the U.S. into orbit.  But by the 1980s, father-of-the-Soviet-bomb Andrei Sakharov was comparing superpower developments to a long-run cross-country skiing race: yes, the USSR is developing technologies and keeping the gap between it and the U.S. close, but it is only doing so by copying the new equipment of its competitor; without innovation of its own it can never hope to catch up with the leader.

Medvedev is obviously right about the need for the Russian economy to diversify while it is still flush with resource riches, but the idea that it can develop a second Silicon Valley or Menlo Park is fanciful.  Henry Kissinger, noting that Hungary '54 was the only communist country ever to make a World Cup semifinal, attributed the sporting failure to "too much stereotyped planning," which "destroys the creativity indispensable for effective soccer."  

How far, and for how long, do such metaphors extend?  Ukraine has a fairly large reserve of underutilized, technically-trained software engineers who have been put to work on outsourced American software development projects.  Perhaps Russian could make itself over into a new India, but it is a long way from developing any new skis.