The Economist

CAN RUSSIA CREATE A NEW SILICON VALLEY?

Skolkovo, a city near Moscow, is thought to become one of the world’s biggest high-tech cities in a few years. It will occupy 400 hectares and it will boast a research university with about 1800 students, 40 corporate research and R&D centers and a Technopark. But the real eye of the storm will be a special economic zone where companies will receivegreat tax breaks and special treatments in visas and imports.

The aim of Skolkovo is to become the basis of the ecosystem and bring to Russia researchers, entrepreneurs and investors in five clusters (IT, biomedical, energy-efficiency, space and nuclear technologies). But, nevertheless it isn't as easy as it seems; in other countries, such ambitious plans have usually failed. Since Medvedevbegan the project in 2010, the government has spent over $3 billon and it is planned to spend billions more indirectly via tax breaks.

On one hand the project is going well. The MIT has agreed to set up the Skolkovo Institute of Science and Technology (SkTech) and, in addition, some big firms have been attracted. About 20 companies have signed up, including Cisco, IBM and SAP and each of them willopen an R&D laboratory and co-operate with SkTech.

On the other hand, it is more complicated to evolve the same business culture as Silicon Valley. The Skolkovo Foundation, which runs the project, wants to achieve it with cash. The main idea is to build a long pipeline of start-ups to reside in Skolkovo. In this way, The Skolkovo Foundation provides them some initial cash with the hopethat venture capitalists will later invest in them. Firms first apply for "resident status" and after have been viewed by the experts who work for The Foundation, some of them are elected and can apply then for grants of $150,000.
Thus far, more than 500 firms have obtained resident status and over 100 have received some money from Skolkovo Foundation. But yet, local capital is limited and foreignmoney also isn't pouring in because Western investors deem Russia too risky. Besides these capitals issues, a small version of Technopark is already opened, but most of the offices are empty or the firms use them only occasionally and do the real work elsewhere. The fundamental problem is that Russia hasn’t been seen as a business city lately; It is a tough place to work and invest.

This projectwas started by Medvedev and nowadays, Putin, the current Prime Minster wants to carry it out. For some people this project would help the country to change and modernize, but for others Russia would have to change so much that it’d no longer be necessary.

* Skolkovo will be the world’s biggest high-tech city in a few years
* Its aim is for Skolkovo to become the basis for a ecosystemthat spans all of Russia
* MIT has agreed to set up the SkTech Institute
* For getting a huge business culture Skolkovo Foundation is providing grants and other privileges.
* But, the western investors deem Russia to risky, so local and foreign capital is limited.
* Moreover a small version of the Technopark has been opened and it isn’t working as it was though
* Some people arein favor of the project and others not so much

SHUMPETER: INTOXICATION

Child author Roald Dahl wrote the best study of innovation in the food-and-drink industry. In Charlie and the Chocolate Factory, he describes how old products can be offered in new ways and how a gifted innovator can produce entirely new products. In his work, Dahl also understood that a company is more likely to innovateif the boss is obsessed with their products.

To start with the drinks business is one of the world's most conservative, less if we are talking about emerging markets. There, drinkers haven't been defined yet, so innovation is rife.
Diageo's research center in Bishop's Stortford is a normal office in a little town near London, which devises new ideas for Africa, the most exciting market for...