Analysis – Russian modernization hinges on education reform

(Reuters) – Russia, the nation that put the first man in space, has been so focused on high-earning oil and gas since communism collapsed that it may find it has no one left to drag the wider economy into the 21st century.

President Dmitry Medvedev has made economic modernization his key priority, but academics say decades of underinvestment in science and technology education and opaque distribution of grants make it a very challenging task.

“Our students are becoming less and less competitive,” said Sergei Guriev, head of the New Economic School in Moscow.

“This is a result of funding shortfall and brain drain, not only to other countries but to business as well.”

Thousands of scientists fled Russia for the United States and Europe after the collapse of the Soviet empire in 1991.

But some observers believe the problems began accumulating long before, that as Russia started building up what is now the world’s biggest energy industry.

“Since the ’70s, the need for quality education has been declining … because an oil- and gas-based economy requires even less education than a coal- and steel-based economy, let alone the post-industrial economy,” said Vladimir Mau, dean at the state Academy of National Economy.

The Kremlin has pledged to bring the best talents back. But with even holders of doctorates still earning only around $500 a month, few are willing to return.

Russia’s education budget has doubled in the past 10 years, but is still only a fraction of what it used to be in the Soviet Union. Mau said the belief that Soviet education was better compounded the problem.

“It was pre-industrial. This education was supposed to give people education for a lifetime, without implying further need to constantly update it. As long as we believe that Soviet education was the best, we won’t increase the demand for quality education.”

This year, education will get 419.3 billion roubles ($13.79 billion), or 4.2 percent of total federal spending, 4.6 percent less than last year. The U.S. education budget for 2010 is more than three times that of Russia, at $46.7 billion.

A study by Thomson Reuters showed this year that Russia’s research output has declined steadily over the past decade.

With research output of 2.6 percent of the world’s papers, Russia lags behind the emerging economies that it is often compared with — India at 2.9 percent and China at 8.4 percent.

Some 2,200 scientists wrote a letter to Medvedev this month, telling him his plan for economic innovation was doomed if Russia failed to attract new young students or teachers into science.

QUALITY DIPLOMA, POOR EDUCATION

At the very least, the state should return to a system in which grants are distributed on the recommendation of leading scientists rather than state bureaucrats, the scientists said.

Surprisingly, the number of Russians graduating has stayed steady or grown compared with Soviet days, even though polls show only one percent are attracted by scientific jobs.

But diplomas for sale and bribes to the right people have become new shortcuts for young people chasing quick money in business and government jobs.

“Everyone wants a quality diploma today, not quality education,” says Andrei Fursenko, Russia’s minister of education and science.

Polls show that most young Russians want to work for the gas export monopoly Gazprom (GAZP.MM) or the Kremlin.

Only one Russian institution, Moscow State University, features in the Times list of the world’s top 200 universities. More than a third of the top 100 are in the United States.

Nikolay Pryanishnikov, president of Microsoft (MSFT.O) in Russia, says that his firm, partners and customers are acutely short of IT specialists, and the trend is worsening.

“Add to that the low birth rate of the 90s (in Russia), and you get an even bigger problem. There are clearly not enough qualified graduates to fill the gap,” he said.

The Kremlin has outlined plans to invest hundreds of millions of dollars into its pet Skolkovo project, dubbed the Russian “Silicon Valley”, to build high tech industries and education from scratch.

But, compared to its plans to invest $1 trillion in infrastructure in the next decade, Skolkovo is a drop in the ocean that cannot change the overall poor state of education.

Guriev says one of the main problems in Russia is that “the money comes from the government, regardless of how well an establishment performs”.

“If the government funded students individually, students would choose how to have the money work best for them. There’s no need to reinvent the wheel, those mechanisms already exist in other universities around the world.” (Additional writing by Dmitry Zhdannikov; editing by Philippa Fletcher and Kevin Liffey)