Feature: eastern Europe

Before moving on to our main focus of Russia, Poland, and Finland, it is worth taking a look at the region as a whole. Unlike previous focuses on the UK and Scandinavia, and continental western Europe and Ireland, the rest of Europe presents a somewhat bleak landscape for technology transfer after its emergence from the break up of the Soviet Union more than 20 years earlier.

With the exception of Finland – considered part of Scandinavia but held back for this report – it is an area which still bears the scars of the old regime. The Soviet legacy has left the area with poor infrastructure, underfunding of science, and an ingrained reluctance to pursue innovation.

The EU has offset this somewhat, as the countries that have joined the community have benefited from development funding it can bring, yet the impact on the region as a whole is, as yet, unsubstantial.

The Balkans wars which followed the break-up of the Soviet Union and the fall of communism in eastern Europe have also had a severe impact from which it has been slow to recover. The Balkans are still on the mend, and are yet to provide much in the way of substantial commitment to innovation – many allocate little funding to support research and development (R&D) and fail to provide a stable environment in which business can flourish and attract investment.

There is also the case of Greece, which is not covered in detail in this report, but bears mentioning because the financial crisis of 2008 has wounded the country in terms of technology transfer.

Russian Federation

Global innovation index rank: 62

Global competiveness rank: 64

R&D spend as a percentage of GDP: 1.16% 

Russian tech transfer offices

Agency of Innovation & Technology Transfer (Republic of Moldova)

Bashkiriya Innovation Centre

Centre for Science, Technology and Innovation and technological cooperation between Russia and APEC

Centre for technology transfer. Industry Center Federal Space Agency (Moscow)

Centre of Technology Transfer System – Sarov

Chamber of Commerce and Industry of the Chuvash Republic – Innovation Centre (Cheboksary)

CJSC Innovative Technopark Idea (Kazan)

Engineering and Transfer Technology Centre (Astana, Kazakhstan)

Executive Directorate of Science and Technology Park (Novosibirsk)

Far East Agency to Promote Innovation (Khabarovsk)
Far-Eastern Regional Centre for Commercializing Scientific and Engineering Accomplishments (Vladivostok)

Innovation and Marketing Institute of the Ural State Technical University (Ekaterinburg)

Innovation Centre Mari State University (Yoshkar-Ola)

Innovation Centre Koltsovo (Novosibirsk)

Innovation Technology Centre InTech-Don (Novocherkassk)

Innovation-Technology Business Centre of Stavropol region (Stavropol)

Innovations and Investment Bureau (Yuzhnyi)
Institute of Development of Intellectual Property «INDEPRIN» (Kishinev)

International Union of Instrument and Information Technology and Telecommunications Engineers (Moscow)

Irkutsk Regional Centre for Development of Innovative Activity

Irkutsk Scince Centre of SB RAS

ISPC INNOTECH Ltd. (Kemerovo)

Kazan Scientific Research Institute for Aircraft Engineering (Kazan)

Kazan State Technical University named A.N.Tupolev (Kazan)

Kazan State University n. Ulyanov- Lenin – Center for Technology Transfer (Kazan)

Kuban State University of Technology (Krasnodar)

Kursk State Technical University

MIRA (Nizhny Novgorod)

Puschinsky Centre for Technology Transfer (Puschino)

The Centre for Technology Transfer – Pavlovsky (Krasnodar)

Mordova State University named N.Ogoreva (Saransk)

National Agency for Entrepreneurship Technological support “INTECH” (Troick)

Nizhni Novgorod State University named N.I. Lobachevski. Innovation and Technology Center Regional Innovation and Technology Transfer Centre (Samara)
Kaliningrad Innovative and Technological Centre

Novosibirsk Innovation technology Centre

Obninsk Centre for Science and Technologies (Obninsk)

Penza State University

Perm State University – Centre for Technology Transfer

Republican Centre for Technology Transfer (Minsk, Belarus)

Rostov Technology Transfer Centre (Rostov-on-Don)
Saint Petersburg State University of Aerospace Instrumentation, Franco-Russian Centre for Technology Transfer

Samara State Aerospace University named academician SP Korolev. Scientific-Technological Park Aviatehnokon

Samara State Technical University. Centre for Technology Transfer

Saratov Innovation Technical Association (Saratov)

Saratov State Technical University. Centre for Technology Transfer and Commercialization of Intellectual Property

South Transfer Technology Center (Krasnodar)

South-Ural Centre of Technology Transfer of Chelyabinsk Scince Centre UrB RAS (Chelyabinsk)

TechnoPark Forsythe (Kazan)

The International Science and Technology Park The TechnoPark in Moskvorechye, Rechnopark MIFI

Tomsk Innovation Support Centre

Tomsk International Business Center “Technopark”

Tomsk Regional Commercialization Centre
Tomsk Venture Investment Centre

Ugorsky Center of Transfer Technology (Hanty-Mansisk)

Ulyanovsk State Technical University. Ulyanovsk regional Technologies Transfer Centre

Ural Regional Technology Transfer Centre (Ekaterinburg)

Water Transport Academy. Centre for Technology Transfer (Nizhny Novgorod)

Zelenogradsk Innovation and Technology Centre, Moscow State Institute of Electronic Technology

In terms of innovation, Russia is playing catch-up. Still lagging from the days of the Soviets, the country struggles to catch up with its once great scientific lineage, which gave the world inventions such as radio, the laser and the periodic table. More recently, Russia under President Vladimir Putin has been investing heavily to move beyond a natural resources-led economy towards identifying and backing potential industries of the future, such as nano-technology, advanced materials and healthcare and set up multibillion programmes, including Skolkovo (see profile) , Rusnano and Russia Venture Company (RVC), to find start-ups around the world, back them and develop innovation in Russia.

The main driving strength behind Russia’s potential innovative capacity is its well-educated populace, along with its large domestic market and good infrastructure. It ranks 13th in the world for enrolment in higher education and 14th for graduates in science and engineering, with over 23% of its population holding a degree. However, despite this burgeoning brain bank, multiple factors hold Russia back.

First and foremost is corruption. Listed in the Global Competiveness Rankings as the number-one factor inhibiting busin
ess in Russia, the country’s battle with its endemic corruption creates a stranglehold on its economy. In terms of new business, the oligarchies that inherited some of the remnants of the Soviet state and maintain power in the Russian economy have in some cases competed with the state and start-ups, such as Yandex and Mail.ru, that represent entrepreneurs with often impressive university backgrounds.

This clouded atmosphere is hampered further by additional factors. The large numbers holding a degree do not translate into innovative capacity, where Russia ranks 78th. Similar to Norway, the appetite for new technology is trodden down by reliance on old money from the oil and gas industries. The country suffers from weak levels of competition, held back by paper-thin anti-monopoly policies and high restrictions on trade and foreign ownership, making it hard and unappetising for outside companies to come in and boost fledgling start-ups and spin-outs.

Funding is also a major issue for potential Russian companies. Inefficiency and a lack of trust in the country’s financial sector, despite the country’s low levels of debt and the 2008 crisis barely denting Russia, creates unfavourable conditions for investment. The country ranks 93rd in the world in terms of ease of getting credit, and the availability of venture capital has only relatively recently improved as successful entrepreneurs, such as Dmitry Grishin, reinvest in the economy alongside the handful of names that backed them.

Furthermore, licensing for universities is a no-go area. Strides have been made to increase the infrastructure provided for technology transfer, with RVC among the state-backed organisations co-ordinating roundtables and discussions for academia. The Russian government has moved innovation towards the top of its agenda, investing in around 200 science parks and business incubators and a further 100 tech transfer centres. Subsequently, membershipof the Russian Tech Transfer Network has grown rapidly since its inception in 2002 to 90 innovation centres, including university and regional tech transfer offices, science parks and incubators.

The Russian government has also supported initiatives such as the Skolkovo project, or Inograd (Innovation City), the country’s attempt to create its own Silicon Valley backed by $4.1bn in state funding. The government has also made tax breaks for the area and encouraged companies such as Microsoft and Intel to become involved, as well as garnering support from Cambridge and Stanford universities.

However, all this work towards a stronger innovation economy is undermined by business apathy. Russian businesses lack sophistication and have some of the lowest rates for technological adoption in the developed world.

Less than 10% of Russian companies make direct investments into R&D or innovation, whereas 70% of German businesses do so. This is something on which Russian prime minister Dmitry Medvedev has called for action, with targets for all companies to invest in corporate venturing as part of their R&D strategy. Cluster development ranks 108th in the world, and innovation links such as university and industry research collaboration score particularly low considering the size and strength of Russia.

And yet, there are signs the message on innovation is beginning to register. The Russian Direct Investment Fund, a $10bn fund set up by Putin, has attracted large amounts of foreign investment. It recently signed a $2bn joint investment deal with Abu Dhabi-based Mubadala Development Company – the largest commitment to Russia from the Middle East – which follows a $2bn fund from the China Investment Corp, a $500m investment fund from the Kuwait Investment Authority, and a $1bn fund established with Japan Bank for International Co-operation.

Now Russia’s venture capital scene is beginning to heat up. In 2012, Russian private equity and venture capital (VC) accumulated volume of capital grew by 28% to $26.4bn. Russian VC is also now fuelling innovation, with over 70% of 2012 deals recorded by the Russian Venture Capital Alliance going into early-stage companies.

We could be witnessing a turning point. Hamstrung by underfunding, corruption and a lacklustre hunger for new technology, Russia’s attempt to catch up has been lethargic at best. But with new money flowing in and the infrastructure in place to support it, Russia is finding the firepower and commitment to turn its slow plod on innovation into a full sprint.

Finland

Global innovation index ranking: 6

Global competiveness index ranking: 3

R&D spend as a percentage of GDP: 3.8% 

Finnish tech transfer offices

University of Helsinki Helsinki Innovation Services

University of Turku Innovation services unit

Tampere University of Technology Talli

University of Jyvaskyla Innovation services

University of Oulu Innovation services

University of Vaasa Research and innovation services

Aalto University Aalto Centre for Entrepreneurship

Lappeenranta University of Technology Innovation services

In contrast to the insidious corruption of Russia, neighbouring Finland boasts a highly competitive infrastructure, built on world-beating transparency of public institutions, the greatest press freedom on the planet, and private institutions noted to be some of the best run and most ethical companies globally. The country also maintains strong infrastructure, health systems and financial markets.

Finland also has an education system all countries seem to aspire towards. It is ranked number one in terms of primary education, and the quality of both its higher education system and, more specifically, its maths and science education are both ranked second in the world. This level of educational efficiency is evidenced further in the workplace, with the extent of staff training in the country also ranked second.

This all translates into an outstanding capacity for innovation.

The transparency of industry has led to strong bonds of trust between companies and academia, with high levels of collaboration between the two (fourth in the world). Its state of cluster development outstrips every other country in Europe, if not the world, fuelled by an insatiable appetite for information and communication firms, spurred on by the historical and current success of phone maker Nokia, IT service firm Tieto and games developer Rovio.

Providing, in part, the framework for this successful collaboration is Finland’s Strategic Centres for Science, Technology and Innovation (Shoks). The not-for-profit organisations bring together key companies, universities and research institutions in a certain sector, such as Cleen in energy and environment and Fibic in bioeconomy. The Shoks aim to deliver long-term collaboration on research goals, putting R&D ahead of the numbers, even going as far as to bar short-term market goals from its strategy.

In addition to the creation of the Shoks, the University Inventions Act which established them also fundamentally changed the Finnish tech transfer landscape in another, important way. Previously, the country had adopted the so-called professor’s privilege rule, popular in Sweden, according to which rights to intellectual property (IP) generated in academia remain with the inventor. Under the new law brought in six years ago, the country has adopted a model more in line with the UK and US whereby the institution retains the rights. This has enabled tech transfer departments for universities in Finland greater financial flexibility and more resources for commercialising university IP.

Even financial troubles at Nokia could become a bo
on for the country. Once the largest company in Finland, Nokia’s downsizing and subsequent sale of its mobile phone business to Microsoft has left a pool of highly-skilled information and communications technology (ICT) professionals

available, making the country an ideal location for a multinational to base an R&D centre. The country’s booming gaming sector, driven by a thriving entrepreneurial spirit born out of the ashes of Nokia, provides a host of opportunities for foreign investment.

While not exactly in the dumps, investment is the one area Finland can improve.

Start-ups and spin-outs can tap government innovation agency Tekes, which supports 47 out of the 50 fastest-growing tech companies in Finland, or funds backed by the European

Investment Fund, such as the €77m ($104m) clean-tech Power Fund III. New firms can also draw on Finland’s venture capital sector, which continues  to grow stronger. Fundraising in 2013 has been much better than 2012, with €319m raised in the first half of this year compared with €99m raised for the same period last year, while 110 companies received investment over the first half of this year, totalling €59m, compared with 146 companies totalling €82m for the whole of 2012.

Overall, Finland maintains innovation levels comparable to, if not better than, many of its peers from Scandinavia and western Europe. This all has a positive impact on the country’s ability to perform tech transfer, which is still adjusting to the recent changes to bolster and support it. As this environment grows, nurtured by a strong environment in which it can prosper, it can only mean bigger and brighter things from Finland’s universities.

Poland

Global innovation index ranking: 49

Global competiveness index ranking: 42

R&D spend as a percentage of GDP: 0.74% 

Poland is quite representative of many countries in the eastern European area. Its innovation output is dwarfed by almost all its western neighbours, and its rankings on most fronts are very much middle of the road territory.

The country’s tech transfer scene is new, and relatively inexperienced, with tech transfer units associated with universities springing up only in the past few years. As such, there is a large degree of disorganisation, and very little data can be found relating to output. Overall, Poland ranks fairly low in terms of tech transfer capacity compared with other countries, languishing at a ranking of 75 globally.

To compensate for this, Poland is an importer of technology rather than an exporter. For Poland to accelerate its development, there needs to be a more cohesive plan to increase collaboration between universities and industry, an area currently somewhat stagnant.

There is also a dearth of funding. Currently ranked 104th, venture capital to support fresh businesses is scarce. Factors in this include poor infrastructure and unfavourable tax regulations, and the country is perceived to have an inefficient government bureaucracy.

In terms of higher education, many Poles enrol, ranking 18th in the world. However, this does not translate into maths and science capacity, in which Poland performs badly. Rather, it would seem Poland jockeys for position in terms of creative industries output, with its exports for doing so ranking at 12.

These factors mean many countries have raced ahead of Poland in terms of innovation. Similar to Russia, many firms have been slow to adopt new technologies. However, unlike its former Soviet partner, Poland seems to lack the drive to make up for this discrepancy, and there are little signs that Poland is particularly interested in catching up on the innovation front.

That is not to say that there are no plans in place. Poland is just completing a six-year plan to increase the innovative output of the country, funded by €10bn from the European Regional Development Unit, which had the remit of delivering greater business innovation and increasing the competiveness of Polish science. However, the funding has yet to deliver any great steps forward for Poland, which has more or less ambled on.

There is no silver bullet that can propel Poland forward.

As with its neighbours to the east, the country has multiple issues that need to be addressed before it can become an attractive environment for tech transfer, none of which will be solved overnight.