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  1. 1. MONEY AND POLITICS Jointly with Discussion Club Harvard Club of Russia Initiative to support National Program to Upgrade Human Resources “Global Ed “Gl b l Education for the Russians" ti f th R i " Moscow, 2010
  2. 2. Russia greatly lags developed countries by labor productivity Labor productivity Index; USA = 100% 100 93 78 72 45 26 Economy as a “The main problem for the Russian p whole, 2007 economy today is its extreme inefficiency. Labor productivity remains at an extraordinarily low 134 120 level… The main sectors of the 100 Russian economy should achieve 71 at least a fourfold increase in this Retail 25 11 indicator within 12 years" banking, V. Putin* 2006 100 63 60 21 Construction 2002 2004 2004 2007 *Source: Speech delivered by V. Putin on February 8, 2008, to an expanded session of the State Council on “Russia’s Development Strategy to 2020” 1
  3. 3. Russian economy can grow four times if modern technologies* are implemented through upgrade of human capital Potential for Russia’s economy growth through implementation of modern Labor productivity in Russia technologies Development stages: (as % of the US 2007): Growth through innovation -unlimited -requires full adoption of modern technologies ∞ INNOVATIVE ECONOMY Modernization +74% MODERNIZED ECONOMY - Labor productivity increase 4 times ** - Requires mass implementation of ** e g ee g and a age a engineering a d managerial technologies** Efficient and World-class Efficient innovative universities Government business UPGRADE OF HUMAN CAPITAL Utilization of spare capacity «CEILING» OF BACKWARD PERCEPTIONSS – CANNOT BE REMOVED - Exhausted 26% WITHOUT HUMAN CAPITAL UPGRADE - Obsolete equipment and technologies hinder productivity ** Russia, 2007** R i *Here and hereinafter by "technologies" are assumed engineering, managerial and institutional technologies **Source: McKinsey Global Institute, «Lean Russia», 2009 MONEY AND POLITICS Discussion Club
  4. 4. Powerful instrument to upgrade human capital – invitation of bearers of global technologies – is not used in Russia Change in the indicator х (х) – Previous period MODERNIZATION Bearers of global technologies – Universities in BCG Global Government educated in foreign universities: The Times Innovation effectiveness1 Top-100 Index • 13,6% ministers (incl 2 PhD) • 9% members of Central Committee of the Communist Party • 81% members of Chinese Academy of Sciences 35 (46) 6 27 • 9 из 10 most influential economists • 32 из 39 rectors of Shanghai Universities • >20% professor of top 10 US universities 9 (9)- 57 8 • 20 из 21 ministers of Singapore 1 (2) 2 1 • >90% of the heads of universities and companies • <1% officials • <1% university professors • PhD in Economics in national government: 0 71 (64) 02) 49 1 World Bank 2009 2 Best Russian university is #214 by quality of publications MONEY AND POLITICS Discussion Club
  5. 5. One of the most important tools to acquire modern technologies – education in global universities – is not employed by Russia Russia is not a leading country by the number of students abroad … moreover, is critically behind developed countries1 Students abroad, # Share of students studying abroad, (% of total students of the country/region) Central Asia China x15 1 Western Europe East Asia and Oceania USA x5 USA x11 Central and Eastern Europe China x4 Russia Latin America Russia 0 100 000 200 000 300 000 400 000 0 1 2 3 4 Russia is a laggard by training of its scientists in global universities 2 Share of students in U.S. PhD programs to the country's population Selected countries, % Growth of students in U.S. PhD programs in 2000-2008 South Korea x24 300% All countries 68% Taiwan Singapore x12 China 90% Turkey 178% India Thailand Chili 200% Russia -33% China x3 Top-40 Russia is #34 out of 40, Italy falling behind both Germany x2 developed and developing Saudi Arabia S di A bi countries France 100% Japan India Venezuela Iran Russia 0% 0 0,1 0,2 0,3 2000 2002 2004 2006 2008 The biggest gap is in the disciplines critically important for the modernization: In 1992-2007 the number of Russian citizens who received PhD in the USA: in economics - 117; in political sciences and public administration - 21 MONEY AND POLITICS Source: 1) OECD, UNESCO; 2) Surveys of Earned Doctorates, NSF Discussion Club
  6. 6. Studying in global universities will enable upgrade of human capital and help development of the educational system in Russia Improvement of Russian education Increased funding for Russian Mass education of Russian citizens in Hiring of foreign teachers and experts education global universities Support by the majority of the Rapid attraction of bearers of Speed vantages academia and society in general modern technologies to Russian educational system Mass capturing of global technologies Adv Low risks of inefficient spending Long waiting time, especially in Expensive The need to overcome the "myths" lagging areas (economics, political (economics (see next slide) science and administration) Complexity of integration into the Drawbacks Russian scientific / social Risks of non-return Requires personnel already in environment (minimized by conditions of financing possession of modern technologies only if the students return to Russia, Limited applicability and special types of visas such as visas, D Risks of inefficient spending J1 visa in the U.S.) ples Examp Necessary but unattainable Accelerated development in Creating a foundation without the other components limited areas to improve education in Russia MONEY AND POLITICS Discussion Club
  7. 7. Russia lags in educating its people in global universities because of a number of wide-spread myths MYTHS ABOUT REALITY EDUCATON ABROAD Those who left then returned and founded This is a “brain drain” “silicon valleys” in Singapore, Taiwan, India and other countries MODERNIZATION AND Russian universities in the Times Top100: 0 Russian universities are world-class INNOVATIONS Quality of publications: MSU – #214 • “Capturing” of global "Specificity" can be quickly grasped on technologies and Not compatible with the specificity of Russia returning home but acquiring cutting-edge home, markets knowledge is difficult in Russia • Through education in The cost of the program is less than 1% of global universities Better to finance the Russian universities budget for education in 2010-13, while it can • Will require radically improve the education in Russia overcoming Students from global universities are a source established Promote stability, ensuring the success of of instability misconceptions modernization We are a great country with our own mission – No success stories in isolation from the world the others should learn from us WE DON’T NEED YOU HERE! STUDY AND RETURN! MONEY AND POLITICS Discussion Club
  8. 8. Even if not returning straight away, people who received their education in global universities are a powerful source of network, technology and entrepreneurship GONE TO STUDY RETURNED RESULTS Miin Wu did not get back to Taiwain In 1980s Taiwan actively Miin Wu returned and founded upon graduation from Stanford in engaged the Diaspora: to the Macronix Co – leader of the 1976. 1976 Got 10 years of job point of building special kinder Taiwan “silicon valley” Hsinchu experience in the USA gardens Indians became among the leading India started to actively attract them Some returned and founded Bangalor programmers in the USA back in late 1990s “silicon valley”: 20 largest companies silicon valley : are founded or governed by the “returnees” In 30 years over 1 500 000 y Chinese leaders dine in Silicon Valley, y 60% of foreign direct investment is g Chinese studied abroad attracting "returnees" home. coming from the Diaspora Plans to attract 135,000 to the civil China became a leader in car service manufacturing «They made their choice. Why should >20% of academic Diaspora In 30 years around 100 000 left to get we pay them for their return ticket?» publicly asked for an educational foreign education Difficulty in getting visa reform (2009) Foreign diplomas are not recognized Signs of some improvement recently g p y Foreign Diaspora – strategic asset, heavily invested in by leading players: In the last 10 years China President of the USA increased 3 times the number of announced plans to increase student abroad and the funding number of American students in for the program China from 33 000 to 100 000 MONEY AND POLITICS Discussion Club
  9. 9. National programs of human capital upgrade of other countries enable return of the students and application of the acquired knowledge Description Enforcement of the Return Results Brasi • Loans for education abroad • If the student works in Brazil as • About 4000 loans are through 2 government agencies: many years as he/she spent disbursed annually National Counsel of Technological abroad the government • There is evidence of and Scientific Development compensates the loan strengthening scientific links, (CNPQ) and a branch of Ministry of • Otherwise the student is like increasing numbers of Education (CAPES) responsible for paying it off foreign professors Turkey • The Scientific and Technological • If the student returns and works in • Up to EUR 100 MM are spent Research Council of Turkey Turkey for 2 years the loan is annually on scholarships for provides loans for those willing to compensated by the state education abroad get a PhD abroad • The government provides exclusive managerial positions and opportunities for career development Kazakhstan • «Bolashak» scholarship • A prerequisite for candidates is • Up to 3000 students a year established in 1993 subsequent employment in receive the scholarships • Enable students to receive Kazakhstan (budget of USD 100 MM a bachelor and master degrees and year) PhD in 630 universities of 32 countries China • China Scholarship Council (CSC) – • Despite the absence of special • In 2008 ~13000 scholarships a non-profit institution responsible mechanisms, of the ~ 37,500 granted, 5 times as many as in for organization and financing of attendees ~36,500 people 1996 foreign education from high school returned, returned which makes a 97% • In 1996-2008 48 000 people 1996 2008 to post-doctorate studies (over 185 return ratio received education abroad programs) MONEY AND POLITICS 8 Discussion Club
  10. 10. The program can remove most of the obstacles to learning global technologies DESCRIPTION 1 Attracting scholarship holders: the site • Social advertising, Internet and • Dealing with universities to and thefaculty and graduates Social advertising, Internet attract site INFORMING • Assistance in roadshows in program, preparation and enrolling Informational choosing the the regions • Regional representative offices to to attract faculty and graduates • Dealing with universities in order 2 • Arranging enrollment planning sessions • Arranging test solving workshops PREPARATION • Providing preparatory materials AND ENROLLMENT • Assistance in getting a loan from a commercial bank • Examination fees (GRE, GMAT) • Signing off the educational loan 3 - 50% over 5 years in case of returning to Russia - 100% over 3 years in case of public service or employment in education and science ATTRACTION • Educating high-level public servants abroad TO RUSSIA • Providing public service vacation list within the attraction program AND EMPLOYMENT • Carrere planning assistance • Graduate club
  11. 11. Program options 1 MINIMUM 2 FULL-SCALE Vs. number of governmental Sending to study Sending to study scholarships in other • 10 000 Russian citizens within the governmental • 30,000 Russian citizens within the governmental countries in 2011- program program, including 2013: • 5-10% top-ranking public servants (3-6 months) • 10-20% top-ranking public servants Kazakhstan 10 000 Attracting to Russia Attracting to Russia Brazil 15 000 • 1 000 to public service p • 3,000 to public service , p China 50 000 • 2 000 to universities • 6 000 professors and scientists • 15 economists often referred to for designing • 50 economists often referred to for designing economic policy economic policy RUB 15 billion* RUB 45 billion FORECASTED EFFECT OF CLOSING THE INTERNATIONAL EDUCATION GAP VS. OTHER COUNTRIES Number of students abroad 800 000 China 600 000 USA 400 000 Scenario 2 Russ 200 000 Scenario 1 ia As is 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 * Less than 1% of 2011-2013 Russian federal budget for education
  12. 12. Scholarship program success depends on national leaders' support, effective management and active attraction of scholarship holders to home country LEADERS SUCCESSFUL IN MODERNIZING THEIR COUNTRIES CRITICAL PROGRAM SUCCESS FACTORS LEADER'S SUPPORT REQUIRED Deng Xiaoping , China economy growth architect Mass-scale education abroad is the strategic task to make • National leaders who launched the programs of modernization happen Lee Kuan Yew, learning global technologies went down to history as father of the Singapore economic wonder the founders of their countries' success LEADERS MEET THEIR SUCCESSFUL COMPATRIOTS ACROSS THE • In all these cases, the key to program's success was GLOBE TO ATTRACT THEM BACK HOME the national leader's support and initiative « ..scholarship holders scholarship holders... helped turn our port city into the model economy» • National leaders – founders of success: – Appointed program steering committee and Lee Hsien Loong, Singapore prime minister, Cambridge and Harvard graduate program management with international experience Our compatriots abroad are the base for international trade – Actively attracted technology champions to public service Ma Ying-jeou, Taiwan president, Harvard graduate «..the success of modernizing China is linked to international education programs.» Zhang Xinsheng, China deputy minister of education and scholarship program leader, Harvard graduate MONEY AND POLITICS Discussion Club
  13. 13. Next steps (1/2) For program implementation Make the decision on Program implementation option g p p 1 Appoint program steering committee and program management with 2 international experience 3 Develop and implement a detailed program implementation plan E-mail: MONEY AND POLITICS Discussion Club
  14. 14. Next steps (2/2) For program promotion Sign the attached letter supporting the Program* g pp g g 1 Propose candidates for supporting the Program to the initiative 2 group • Communicate your suggestions on the program to the initiative group 3 • Meet the initiative group and/or make a presentation at Money and Politics Club E-mail: MONEY AND POLITICS Discussion Club
  15. 15. Program council team members E-mail: Name Highlights • McKinsey consultant since 2007. Implemented projects on strategy development for several Russian economy sectors and enhancing operational efficiency for major Russian industrial and energy companies Alexander Leonov • Worked in the USA in telecommunications and other communications management area for two years • Graduated from Moscow Institute of Physics and Technology and the Business School at Moscow Institute of Physics and Technology / Academy of National Economy • Worked as the director of research and portfolio manager at Marquardt Spectrum investment fund, senior analyst at CERA, as well as at RAO UES of Russia as head of expert group for the developing a competitive market for electrical Valentin energy in CIS Preobrazhensky • Master of Finance degree from New Economic School; Maser of Management and Bachelor of Economics degrees g g g from Higher School of Economics, additional education: Harvard University and Stanford University • Has been working at Russian Corporation of Nanotechnologies since 2009, before that worked for Morgan Stanley investment bank in London office , focusing on M&A in Financial Institutions sector Kirill Dushkin • MSc Management deg ee from Imperial Co ege , London Sc a age e t degree o pe a College o do • Graduated from Moscow State Institute of International Relations (BSc and MSc in Economics), where he founded the MGIMO Business Club and was elected Chairman of the Student Research Association • McKinsey engagement manager. Implemented projects on strategy and operational efficiency for major energy and mining companies in Russia. Helped international companies to enter Russian market Konstantin o sta t • Served as a trainee at Goldman Sachs bank, working in the area of financing fast growing companies in Russia bank Kuzovkov • Graduated from Harvard University (MBA) and Finance Academy under the Government of Russian Federation • Has been working in World Bank for eight years. Lead public sector restructuring projects in Middle East and Central Asia and coordinated projects on implementing the assessment of regular impact in Russia on federal and regional p j p g g p g Michail level Pryadilnikov • Ph.D degree from Harvard in public administration (2009). Taught the theory of management in London School of Economics • CEO and a co-owner of a telecommunication company IP-Net. Achieved a 65-time growth of company revenues and was among th first in the world to implement a new satellite t l the fi t i th ld t i l t t llit telecom t h l technology i t l in telecom Murad • Elected the President of Harvard Club alumni association (360 members in Russia) Sofizade • MBA and MPA from Harvard University • Belongs to 100 most respected Russian entrepreneurs (according to