Wednesday, July 11, 2007

Nano in Russia

Valerie found this interesting item on the Russian national legislature's formation of "a new Russian corporation of nanotechnologies (Rosnanotech)." (It comes with this indecipherable image - nano-symbolics without content.)

There are some odd things about Rosnanotech's structuring, and the article's author states that many people are worried that Rosnanotech will be used to launder money or just plain steal state funds. Probably. That's a time-honored Russian tradition, or actually, world tradition. There are different forms - sometimes the money just disappears and gets spent on villas and private helicopters for company officers, sometimes it just builds in large extra costs for services actually performed. Maybe Rosnanotech will be more the latter, and nano will move Russia towards a more Western-style corruption - unintended nano-societal consequences?

But the more immediate issues are:
  • Russia intends to spend about $7.75 billion over three years, or, in very round numbers, twice the annual expenditure of the U.S.
  • Russia doesn't have enough "men of science," as the piece puts it - their human capital problems will probably hold them back.
  • Rosnanotech will have monopoly control over nanoscale product areas.
The article assumes this last is a bad thing.
There is a problem that worries even scientists – the corporation is to form a monopoly in the nanotech field, which respectively limits opportunities of the free market to select the most competitive ideas. Today the Russian research centres work mostly on nano-materials, while such prospective and promising spheres as nano-biotechnologies and new nano-projects in the energy-producing industry are undersold.
The confusions in this passage are pretty common in Western coverage of nano. Say "Russia" and most people will still think "planned economy" and "total economic disaster." (Say "Japan" and the story of big government is much more complicated and positive.) So this author focuses on planning failure, ignoring the other big story of early-stage tech development, which is market failure. Lots of great tech innovation goes begging for a market, and there are dozens of good books about "crossing the chasm" from technology to product, which is very very hard.

When you think about the history of information technology or biotech, you realize that the most reliable business model has been, well, think of Microsoft and Cisco, as opposed to say Seagate, and think of Amgen and Genentech as opposed to almost every single other bio tech company, all of which make very little money when they are not actively losing huge piles of it. (Remember Shaman Pharmaceuticals? No you don't, but I do, because it lost several thousand bucks of my just-tenured associate professor's salary back in the late-90s.) Think of the interest in California today in hitching nano to existing manufacturing platforms to avoid sinking those existing costs. The most reliable business model has been monopoly, though we have much nicer and more accurate terms for it, ones that reflect the need for ongoing flexibility and adaptation to protect a dominant market position.

So maybe Russia, with its large public investment; its great traditions in the physical sciences, engineering, and math; its history of successful public science (Vostok-1 beat Mercury 3 into manned orbit in April, 1961; its Soyuz series; and of course Sputnik, to which American public science owes its late-50s - early-60s 10x funding boost); and its monopoly goals - with all this, maybe Russia actually knows what it's doing. Given the troubles nanoscale research is currently having attracting enough private capital, why should we rule out a future Nano-gazprom?


  1. Your very Ignorant person, You many information that is wrong in your blog. This one is very bad thought"Russia doesn't have enough "men of science," as the piece puts it - their human capital problems will probably hold them back.: Russia has the largest amount of graduates in the world( Mostly in Science and math)

  2. Just came across this, I have to agree with the last commentator - you are a dumb ass. Russia is second to only the US in materials science and engineering. All this crap hype about china and india ignore the fact neither has created a thing since gunpowder while Russia developed a science and military industrial complex that stayed even with the US until only recently and is back on the prowl with all the new energy and commodities cash the Russians have.

  3. The previous comments are somewhat harsh. This article leaves the potential success or otherwise of Rosnanotekh as an open issue; it does not suggest that it is a doomed venture.

    The article is also correct, I think, in identifying the issue of whether state-led monopolies can facilitate the sort of cutting edge innovation that Rosnanotekh (and other state corporations in Russia) are trying to achieve. This is a crucial question, both for the diversification of the natural resource dependent Russian economy, and also for economics in general (e.g. are free markets really superior to state ownership in all areas?).