The future of government financing of S&T programs

In 1994, government financing was organized into 41 government S&T programs, 16 federal goal-oriented programs with an R&D element, and 4 interdepartmental programs. The list of government programs includes practically all fields of science and technology. Under conditions of limited financing, this means the funds are dispersed over several projects in each program. A serious issue in S&T policy is to increase selectivity and to shorten the list of government S&T programs.

Another important problem is the formation and implementation of federal goal-oriented programs (for data, see Exhibit A3.13). Often the government de-cides to finance programs and for this it addresses specific items in the federal budget. Examples are the Federal Space Program and the Program of Civil Avia-tion Development. Financing of other programs is decided on the basis of proposals from ministries and departments. The approval procedures are rudimentary. Funds allocated to programs largely support the general upkeep of institutions rather than R&D activity essential to a program’s objectives.

To increase the effectiveness of federal R&D expenditures, the government must clarify the procedure for forming and implementing federal goal-oriented programs. According to MSTP data, 55 percent of the 1995 federal budget appro-priated to civilian R&D was allocated to these goal-oriented programs.

Another method of government support for R&D is provided by state research centers (SRCs). At present, the status of SRC has been granted to 61 R&D insti-tutions which perform R&D in such advanced fields as nuclear physics and power engineering, chemistry and new materials, aircraft development, ship-building, navigation and hydrophysics, medicine and biology, biotechnology, computer sci-ence and instrument making, engineering, optoelectronics, laser systems, and robot engineering (see Exhibit A1.6). SRC status was given to the largest institutes

in the industrial R&D sector, and 17 SRCs are institutes associated with defense industries. SRCs are concentrated in regions that were active in R&D during the Soviet era. Thirty-three centers are in Moscow, and another six are in the region sur-rounding Moscow, eleven are in St. Petersburg; and the regions of Novosibirsk and Tomsk have four each. Some of the centers are located in the former closed science cities. Research institutes with SRC status are given priority in budget financing for approved activities. Between 40 and 70 percent of the total funds obtained by state research centers are provided by government programs (MSTP, 1996).

An evaluation of the two-year experience with SRCs shows that the key ques-tion is whether the centers are worth their costs. Would a selecques-tion procedure for financing based on competition produce better results at cheaper costs than one based on SRC status? Could this selection process be biased toward supporting large institutes inherited from the centralized planning system?

To answer these questions we must take into account the conditions of the economy in transition and the urgency of preservation of the country’s R&D po-tential. The program of SRC development started in 1992, and its large-scale implementation began in 1993, when the amounts of governmental R&D financ-ing were dramatically reduced and survival of R&D institutions was the dominant consideration for policymakers. Therefore, the program was intended to minimize the destruction of the largest and best-known research institutes possessing state-of-the-art equipment rather than to introduce market principles into applied R&D.

In the first two years the program supporting SRCs was not backed with sufficient financing. Government funds allocated to them were hardly enough to pay salaries and maintain the facilities; little was available for renovation and improvement of equipment.

The meager financing notwithstanding, an SRC exhibition in Moscow in November 1995 demonstrated a high standard of S&T achievements; institutes which had earlier been working solely for military needs managed to reorient their operations to civilian purposes. For example, the Obninsk branch of the Karpov Physico-Chemical Research Institute developed and introduced into production various pharmaceuticals. The Research Institute for Organic Semiproducts and Dyes introduced into use radically new pharmaceuticals for cancer diagnosis and therapy. The Applied Chemistry Institute worked out a technology for industrial production of ozone-safe freons. The Bochvar Research Institute for Inorganic Materials is completing certification tests of a new zirconium alloy with a high threshold of radiation resistance for manufacturing envelopes for heat-emissive el-ements of nuclear reactors’ active zones; use of this alloy will increase the efficiency of nuclear fuels by 20 to 30 percent.

The 1995 Moscow exhibition had two objectives: first, displaying achieve-ments of SRCs; second, drawing the attention of business circles to S&T results with the goal of obtaining support for commercialization. In mid-1996, a similar exhibition took place in St. Petersburg.

The results of the SRC program are currently under review. It is expected that some centers will lose their SRC designation; others will have their status renewed;

and some additional institutes will be given SRC status. Despite the drawbacks of the program of SRC development revealed in its implementation, many research institutes continue to seek SRC status. By the end of 1995, the MSTP received more than 200 applications.

SRC development must be improved by establishing more reliable links be-tween applied R&D institutes and industry and by creating more favorable condi-tions for commercialization. Emphasis must be on enhancing the Russian industry’s positions in domestic and international high-tech markets. Activities should be in-troduced that encourage competition in R&D financing. Furthermore, R&D goals should determine the acquisition of equipment rather than equipment determining the research conducted.

Finally, the program of governmental support to scientific schools should be reassessed. In September 1995, the government enacted a decree aimed at reducing the brain drain from the country and raising the prestige of scientists. In the budget of the Russian Foundation for Basic Research, R34 billion were appropriated directly to leading scientists and scientific schools, while another R100 billion were distributed to these scientists on a competitive basis.

The effectiveness of this program is questionable. Any scientist with a profes-sor’s title may claim support under this decree, though it is obvious that the number of leading scientific schools is limited and one can name all their leaders. It is un-clear what a “leading scientific school” means in this context. This expression has been used by the scientific community to designate a specific theoretical direction headed by a prominent scientist who has attracted a group of talented disciples.

However, there is no strict definition which could be used in the implementation of this decree. In some publications, scientific schools means any type of research team (Tretyakov and Melikhov, 1995).

Any effort to distribute government funds must define clear and concrete rules.

Criteria must be developed to determine leading scientific schools. Their presence must be confirmed in certain scientific areas. Lists of leaders in the respective schools must be available. These criteria will provide a rationale for financing projects of leading scientific schools and the question of whether they are suitable for budgetary support can be reconsidered.