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RUSSIA AND CHINA in THE global KNOWLEDGE ECONOMY

RUSSIA AND CHINA in THE global KNOWLEDGE ECONOMY. Harley Balzer Georgetown University CEIP , Nov. 30, 2012. BOOK OUTLINE. Puzzle: Why China, Not Russia? Existing Explanations Alternative: Quality of Integration With Global Economy Focus On 4 INTERRELATED Topics: Economic Regionalism

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RUSSIA AND CHINA in THE global KNOWLEDGE ECONOMY

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  1. RUSSIA AND CHINA in THE global KNOWLEDGE ECONOMY Harley Balzer Georgetown University CEIP, Nov. 30, 2012

  2. BOOK OUTLINE Puzzle: Why China, Not Russia? Existing Explanations Alternative: Quality of Integration With Global Economy Focus On 4 INTERRELATED Topics: Economic Regionalism Leading Sectors Corruption Education, Science & Technology, Innovation For CEIP, H. Balzer, Georgetown U. 2

  3. Puzzle Why China and not Russia? NOT what modernization theory would have predicted December 2004: Baikal Finanz buys Yuganskneftegaz Lenovo buys IBM PC Division Commodities vs. Industry Best (China) and Worst (Russia) G-20 performers in 2008-12 crisis For CEIP, H. Balzer, Georgetown U. 3

  4. OUTLINE FOR TODAY Russia and China in Global Knowledge Economy Education S&T Indicators/Cases/Innovation Some Numbers Autos Nanotech IT Changing Relationship Conclusion: Why China, Not Russia For CEIP, H. Balzer, Georgetown U. 4

  5. 2 DISCLAIMERS • I derive no pleasure from this depiction of the Russian case. • The China story describes how they got to where they are; it is not a prediction of where they will be in the future (Winners problem. Pettis 2011). For CEIP, H. Balzer, Georgetown U.

  6. LIVANOV RIGHT ABOUT DECLINE Russia finally joined WTO Worst performance among emerging markets in crisis. Lost decade; no diversification Medvedev claimed lessons from crisis But few concrete achievements Russia losing Education and S&T capacity For CEIP, H. Balzer, Georgetown U. 6

  7. Output Growth (%) RussiaChina 2008 5.6 9.6 2009 -9.0 8.7 2010 3.6 10.0 2011 3.4 9.7 2012 (estimates) 3.5 7.5 For CEIP, H. Balzer, Georgetown U. 7

  8. Growth in Research Output, 1999-2008 H. Balzer London Oct. 2010 For CEIP, H. Balzer, Georgetown U. 8

  9. Share of Global Publications, 2010 For CEIP, H. Balzer, Georgetown U.

  10. NOT What Everyone Expected Modernization theory Literacy; higher education Urbanization; industrialization Media; communication Asian miracle Education necessary, not sufficient Cf 1950s predictions: Rangoon and Manila, NOT Seoul. China got education and S&T systems from USSR = similar challenge to adapt. For CEIP, H. Balzer, Georgetown U. 10

  11. Existing Explanations for China’s Economic Performance Initial Conditions Policy Will go fast; can come back in Q&A For CEIP, H. Balzer, Georgetown U. 11

  12. Initial Conditions I Abundant supply of low-cost labor not covered by the welfare system Decision to begin reforms with agriculture Shorter duration of communist rule Fewer distortions Less complete Communist Party penetration of society Qualitative differences in leadership (Stalin vs. Mao) For CEIP, H. Balzer, Georgetown U. 12

  13. Initial Conditions II Communities of co-ethnics willing to provide investment capital “Continuity hypothesis” (2 versions) Neo-Ming: restore position before the 18th century = world leader; Maoist: strong, sovereign state and cohesive ruling party. (Putin’s favorite) For CEIP, H. Balzer, Georgetown U. 13

  14. Policy Gradual approach Stable environment Authoritarian leadership (Putin’s other favorite) For CEIP, H. Balzer, Georgetown U. 14

  15. Gradualism? USSR 30 years of reforms. Hungary “goulash communism” China Rapid de-collectivization “Fevers” and intense competition resulting from partial openings (Zweig). Real gradualism was gradual acceptance of unintended private sector. Not necessarily permanent. For CEIP, H. Balzer, Georgetown U. 15

  16. Stable? Democracy Wall 1979 Anti-Spiritual Pollution 1983 Bourgeois Liberalism 1987 Tiananmen 1989 Each time, economic reforms resumed, due to COALITIONS of winners, investors and political leaders. Zweig: Development coalitions Pei: “Social takeover coalitions” Howell: “Spiraling out” For CEIP, H. Balzer, Georgetown U. 16

  17. Authoritarian? Deng’s “Three No’s” No promotion of privatization No propaganda campaign No crackdown Competition Repeated pattern: success where state partially lost control (Zweig, Nee and Opper) State priorities often not achieved, but (some) regions develop For CEIP, H. Balzer, Georgetown U. 17

  18. Alternative Explanation Character of integration with the international economy: “Thick” vs. “Thin” NOT simply open or closed (cf Japan) China’s Thick integration generated coalitions of entrepreneurs, officials and foreign investors = able to win (some) battles: BOTTOM-UP DEVELOPMENT Nothing comparable in “ democratic” Russia For CEIP, H. Balzer, Georgetown U. 18

  19. Chinese Elites Embrace Globalization, Russians Not Bolshevik heritage? Time under communism? Timing of the opening? Cultural Revolutions Self-confidence of leaders For CEIP, H. Balzer, Georgetown U. 19

  20. Quality of Integration China Thick; Russia Thin Chinese see Globalization as their best chance to catch up and surpass Russians view Globalization as Americanization, designed to relegate them to junior partner status or worse. Threatens epistemic communities. For CEIP, H. Balzer, Georgetown U. 20

  21. BOOK OUTLINE:FOUR INTERRELATED TOPICSDEMONSTRATINGQUALITY OF INTEGRATION • REGIONALISMS (Sub, Trans, Multi-National) • SECTORAL POLICY • CORRUPTION • EDUCATION, SCIENCE, TECHNOLOGY, INNOVATION For CEIP, H. Balzer, Georgetown U.

  22. 4) Education, Science & Technology,Innovation Stunning reversal of positions Russian Universities in decline China now the fastest-growing R&D community, changing innovation model. Russia less integrated with global S&T = increasingly less important. For CEIP, H. Balzer, Georgetown U. 22

  23. INTERRELATED • Regions become financial supporters of education, R&D, innovation. Competition. • Growing industrial sectors create demand for R&D and innovation, & provide jobs. • Less damaging forms of corruption = less severely distort merit-based decisions, less inhibit competition • Knowledge economy more likely to promote merit and competition. For CEIP, H. Balzer, Georgetown U.

  24. Global Education Competition:(human & financial resources, status) • For students (both bodies and brains) • For faculty (teachers and researchers; stars) • For managers (education, research, development) • For status = RATINGS GAME • For financial support (state and private) CIRCULATION KEY = INCREASES COMPETITION For CEIP, H. Balzer, Georgetown U.

  25. Higher Education Rapid expansion in both sysems = quality problems: students AND faculty Both emphasizing elite institutions China 211 (106; 9 top priority) Russia National Research (29) and Federal (8 + 2) Universities Chinese internationalizing; Russians losing the best graduates, weak linkages China far greater success in attracting SOME returnees For CEIP, H. Balzer, Georgetown U. 25

  26. Increased Enrollments Russia:China: 2,824,500 (2%) 1997 1,000,000 2008 7,513,000 (5%) 2006 5,500,000 (China target of 30,000,000 by 2010) Neither increasing faculty to keep up For CEIP, H. Balzer, Georgetown U. 26

  27. Doctoral Degrees: Science & Eng. For CEIP, H. Balzer, Georgetown U.

  28. Russia: 90,000 20% Kazakhstan 20% Other CIS 40% Asia (majority from China) China: >300,000 Top 5 Sources: South Korea Japan United States Vietnam Thailand Foreign Student Enrollment 2009 For CEIP, H. Balzer, Georgetown U.

  29. Students Abroad For CEIP, H. Balzer, Georgetown U.

  30. The Education Ratings Game U.S. News & World Report Times Higher Education Supplement Jiao Tong U. Shanghai Spanish Web-based Russian system Grande École des Mines Paris Tech 2011 Iranian “Islamic Universities” For CEIP, H. Balzer, Georgetown U. 30

  31. Times Top 200, 2009 Hong Kong: ( 5) #s 24, 35, 46, 124, 195 China: (6) #s 49, 52, 103, 153, 154, 168 Russia (2): 155 Moscow Lomonosov 168 St. Petersburg State (Mendeleev) 2012 Russia drops out of top 200 For CEIP, H. Balzer, Georgetown U. 31

  32. Shanghai Jiao Tong Top 100 77: Moscow State (Lomonosov) No Chinese or Hong Kong Universities in the top 100 For CEIP, H. Balzer, Georgetown U. 32

  33. Russian Version of Rankings TOP 10 (Global universities ranking) 1 Massachusetts Institute of Technology, USA 2 California Institute of Technology, USA 3 University of Tokyo, Japan 4 Columbia University, USA 5 Lomonosov Moscow State University, Russia 6 Harvard University, USA 7 Stanford University, USA 8 University of Cambridge, UK 9 Johns Hopkins University, USA 10 University of Chicago, USA For CEIP, H. Balzer, Georgetown U. 33

  34. Results of Russian Ranking 2 in Top 100 (Moscow & St. Petersburg) No Chinese or HK in Top 100 U. of MN # 26; U. of MD # 28 Second 100: 2 Russia; 2 China; 2 HK Third 100: 3 Russia; 2 China 301-430: 45 Russian 52 of 430 = 12% For CEIP, H. Balzer, Georgetown U. 34

  35. Real Life:ШПАРГАЛКИ For CEIP, H. Balzer, Georgetown U.

  36. Real Life: внедрение For CEIP, H. Balzer, Georgetown U.

  37. Russian Mass Tertiary Education = Growing Burden on Students • 2/3 at State institutions pay tuition • No price competition (yet) • Cost rising, tied to budget students • Corruption/Fraud • Demographic situation makes this unsustainable For CEIP, H. Balzer, Georgetown U.

  38. For CEIP, H. Balzer, Georgetown U.

  39. For CEIP, H. Balzer, Georgetown U.

  40. Perspective: Russia enrolls more students into higher education than graduate from secondary school. China has a goal of enrolling 25% of secondary school graduates in all forms of advanced education by 2010. BUT China appears to be getting a higher return on its investment. - Better ratings - PISA scores (Shanghai) - Returnees For CEIP, H. Balzer, Georgetown U. 40

  41. Emigration a Problem for Both • China now losing entrepreneurs • Russia losing creative class. For CEIP, H. Balzer, Georgetown U.

  42. Migration & Creative Class quality of life and community even more pronounced for S&T. Best scientists go where the best work is being done = Technology clusters Focus on brain drain often ignores brain gain, and brain circulation. Putin willing to let creative people leave if they are potential opposition. For CEIP, H. Balzer, Georgetown U. 42

  43. Chinese Understanding of Issue Initial Drain. Deng said necessary & unavoidable. He underestimated by 50%. Learned to compete to attract SOME OF them back Competition between regions and institutions = INCENTIVES Returnees in general better than those who stayed home (self-selection.?) For CEIP, H. Balzer, Georgetown U. 43

  44. Russian Ambivalence Resentment of those who left Housing issue Subject to all problems of managing research in Russian environment. Do not recognize foreign degrees Do not permit back-and-forth (beginning to change). Official Programs vs. epistemic communities & corruption. For CEIP, H. Balzer, Georgetown U. 44

  45. Growth in Research Output, 1999-2008 H. Balzer London Oct. 2010 For CEIP, H. Balzer, Georgetown U.

  46. Publications Growth, 1990-2008 For CEIP, H. Balzer, Georgetown U. 46

  47. Numbers of Researchers For CEIP, H. Balzer, Georgetown U. 47

  48. Change in # of Researchers For CEIP, H. Balzer, Georgetown U.

  49. PATENT APPLICATIONSTOP FIVE OFFICES, 1995 & 2010 For CEIP, H. Balzer, Georgetown U.

  50. PATENT GRANTSTOP FIVE OFFICES, 1995 & 2010 For CEIP, H. Balzer, Georgetown U.

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