Russia - On the way to an information society? Prof. Kari Liuhto Director Pan-European Institute (PEI) Turku School of Economics and B. A. The Annual Conference of the Club of Rome Teliasonera / Futurium Helsinki

Russia – geographically giant but economically medium-sized Some 17 mn square km – some 4 times of the EU25 and twice the US territory Some 17 mn square km – some 4 times of the EU25 and twice the US territory The Russian GDP (measured at PPP) less than 15% of the EU or the USA – comparable to the Italian economy The Russian GDP (measured at PPP) less than 15% of the EU or the USA – comparable to the Italian economy

Russia’s 7 federal districts Source: Goskomstat North West Territory10% Population10% GDP10% Ind. prod.12% Oil prod. 4% Exports 9% Imports20% FDI 8% Southern Territory 3% Population15% GDP 8% Ind. prod. 6% Oil prod. 3% Exports 4% Imports 6% FDI 5% Volga Territory 6% Population22% GDP18% Ind. prod.23% Oil prod.22% Exports17% Imports 7% FDI 5% Ural Territory11% Population 9% GDP15% Ind. prod.19% Oil prod.67% Exports24% Imports 5% FDI 7% Far Eastern Territory36% Population 5% GDP 5% Ind. prod. 5% Oil prod. 1% Exports 4% Imports 3% FDI18% Central Territory 4% Population 25% GDP 33% Ind. prod. 23% Oil prod. 0% Exports32% Imports53% FDI56% Siberian Territory30% Population14% GDP11% Ind. prod.12% Oil prod. 3% Exports11% Imports 6% FDI 1%

Economic living standard (2003 at PPP) Source: CIA World Factbook

7 bad years and 7 good years - how fast the economy grows in the future? (annual real GDP change - %) Sources: EBRD, EIU

Glorious past of tele-activity in Russia 1850construction of first telegraph 1850construction of first telegraph 1879first telephone call 1879first telephone call 1895invention of radio by A. Popov 1895invention of radio by A. Popov 1911first demonstration of a TV picture in the world 1911first demonstration of a TV picture in the world

ICT development after the Czar period Absolute decline: Russia has lost her forerunner position in the ICT sector (due to the stagnant Soviet era and less speedy transformation after 1991) Absolute decline: Russia has lost her forerunner position in the ICT sector (due to the stagnant Soviet era and less speedy transformation after 1991) Relative decline: Other economies have developed faster than Russia Relative decline: Other economies have developed faster than Russia

Russia’s telecommunication sector today (2002) Sources: Goskomstat, Solid Invest, ETLA Share of telecomm. in ICT sector Telecommunication share of GDP ~ 70% 1.8% 1.8% Employees 1.7% 1.7% Fixed capital stock 1.4% 1.4% Investments in fixed capital 4.0% 4.0% Share of total services provided for inhabitants in Russia 14.8%

Russia’s telecommunication market ($ bn) Sources: Goskomstat, Solid Invest, ETLA

Distribution of sales in telecommunication (2003) Sources: Goskomstat, Solid Invest, ETLA

Usage of cellular phones Sources: CNews, Solid Invest, ETLA

Russia’s main data transmission lines Sources: Solid Invest, ETLA

Internet access Sources: CNews, Solid Invest, ETLA

Digital access index (2002) Source: International Telecommunication Union This index measures the overall ability of individuals in a country to access and use new ICTs. It is built around four factors that impact a country’s ability to access ICTs: 1) infrastructure, 2) affordability, 3) knowledge, and 4) quality.

Number of ICT-related graduates in Russia (2002) Sources: Goskomstat, Solid Invest, ETLA Universities 3554 Of this: Networks 1451 Multi-channel systems Multi-channel systems 1132 Radio, broadcasting and television Radio, broadcasting and television Other Other Technical schools 5851 Of this: Networks 2363 Multi-channel systems Multi-channel systems 1190 Radio, broadcasting and television Radio, broadcasting and television Other Other 1786

Production of ICT equipment Sources: Goskomstat, Solid Invest, ETLA Equipment PC (1000 units) Phones (1000 units) Telephone cables (1000 km) TV sets (1000 units)

Sales on ICT market ($ bn) Product PC Components Integrated systems General-purpose software Custom-made software Total Sources: CNews, Solid Invest, ETLA

centers Main offshore programming centers Sources: Solid Invest, ETLA

Russia’s foreign trade of ICT products ($ mn) # HS Product ExportsImportsExportsImports 8517 Electric apparatus for line telephony and line telegraphy Transmission apparatus for radio-telephony, radio- broadcasting Reception apparatus for radio- telephony, radio-telegraphy and radio-broadcasting Optical fibers and optical fiber bundles Sources: UN Commodity Trade Statistics, Solid Invest, ETLA

Russia’s exports of software ($ mn) Sources: CNews, Solid Invest, ETLA

Future view Giant need for information society in a territorially-giant country (e.g. news service, e-government, e-commerce, e-education & training, e-medical services, etc.) Giant need for information society in a territorially-giant country (e.g. news service, e-government, e-commerce, e-education & training, e-medical services, etc.) eRussia –programme: a necessary but not a sufficient step forward (total budget $ 2.6 bn) eRussia –programme: a necessary but not a sufficient step forward (total budget $ 2.6 bn) Large investments required Large investments required (e.g. educational system, R&D, innovation funds, etc.) Co-operation with leading foreign corporations, universities, and research institutes needed Co-operation with leading foreign corporations, universities, and research institutes needed (e.g. EU-Russian common space of research and education)

Some advantages of information society Improving competitiveness of the Russian economy Improving competitiveness of the Russian economy (e.g. time savings, free information access, increasing quality of decision-making) Efficient tool for administrative reform Efficient tool for administrative reform (e.g. efficient communication and control system, information transparency, distribution of best practices) Increasing quality of life, particularly in peripheral regions Increasing quality of life, particularly in peripheral regions Increasing equality between regions and citizens Increasing equality between regions and citizens Increasing unity and stability of the country Increasing unity and stability of the country Enhancing free information flows Enhancing free information flows (i.e. good for democratic development of the country)

Conclusion: Russia – on the way to an information society? Hopefully, Russia is on her way to an information society … not on her way to a formation society with less emphasis on democratic development