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Russia - On the way to an Russia - On the way to an information society?information society?

Prof. Kari LiuhtoProf. Kari LiuhtoDirectorDirector

Pan-European Institute (PEI)Pan-European Institute (PEI)Turku School of Economics and B. A.Turku School of Economics and B. A.


The Annual Conference of the Club of RomeThe Annual Conference of the Club of RomeTeliasonera / FuturiumTeliasonera / Futurium

HelsinkiHelsinki11.10.200411.10.2004


Russia – geographically giant Russia – geographically giant but economically medium-sizedbut economically medium-sized

Some 17 mn square km – some 4 times Some 17 mn square km – some 4 times of the EU25 and twice the US territoryof the EU25 and twice the US territory

The Russian GDP (measured at PPP) less The Russian GDP (measured at PPP) less than 15% of the EU or the USA – than 15% of the EU or the USA – comparable to the comparable to the ItalianItalian economy economy


Russia’s 7 federal districtsRussia’s 7 federal districts

Source: Goskomstat

North WestTerritory 10%Population 10%GDP 10%Ind. prod. 12%Oil prod. 4%Exports 9%Imports 20%FDI 8%

SouthernTerritory 3%Population 15%GDP 8%Ind. prod. 6%Oil prod. 3%Exports 4%Imports 6%FDI 5%

VolgaTerritory 6%Population 22%GDP 18%Ind. prod. 23%Oil prod. 22%Exports 17%Imports 7%FDI 5%

UralTerritory 11%Population 9%GDP 15%Ind. prod. 19%Oil prod. 67%Exports 24%Imports 5%FDI 7%

Far EasternTerritory 36%Population 5%GDP 5%Ind. prod. 5%Oil prod. 1%Exports 4%Imports 3%FDI 18%

CentralTerritory 4%Population 25%GDP 33%Ind. prod. 23%Oil prod. 0%Exports 32%Imports 53%FDI 56%

SiberianTerritory 30%Population 14%GDP 11%Ind. prod. 12%Oil prod. 3%Exports 11%Imports 6%FDI 1%


Economic living standardEconomic living standard(2003 at PPP)(2003 at PPP)

37800

28200 27600

11100 107007600

50008900

0

10000

20000

30000

40000

$ pe

r ca

pita

Source: CIA World Factbook


7 bad years and 7 good years 7 bad years and 7 good years - how fast the economy grows in the future?- how fast the economy grows in the future?

(annual real GDP change - %)(annual real GDP change - %)

75

-20

-15

-10

-5

0

5

10

15

1991 92 93 94 95 96 97 98 99 2000 1 2 3 4 5

Sources: EBRD, EIU


Glorious past of tele-activity Glorious past of tele-activity in Russiain Russia

18501850 construction of first telegraphconstruction of first telegraph 18791879 first telephone callfirst telephone call 18951895 invention of radio by A. Popovinvention of radio by A. Popov 19111911 first demonstration of a TV first demonstration of a TV

picture in the worldpicture in the world


ICT development after the Czar periodICT development after the Czar period

Absolute decline:Absolute decline: Russia has lost her Russia has lost her forerunner position in the ICT sector forerunner position in the ICT sector (due to the stagnant Soviet era and less (due to the stagnant Soviet era and less speedy transformation after 1991)speedy transformation after 1991)

Relative decline:Relative decline: Other economies have Other economies have developed faster than Russiadeveloped faster than Russia


Russia’s telecommunication Russia’s telecommunication sector today (2002)sector today (2002)

Sources: Goskomstat, Solid Invest, ETLA

Share of telecomm. in ICT sectorShare of telecomm. in ICT sectorTelecommunication share of GDPTelecommunication share of GDP

~ 70% ~ 70% 1.8%1.8%

EmployeesEmployees 1.7%1.7%

Fixed capital stockFixed capital stock 1.4%1.4%

Investments in fixed capitalInvestments in fixed capital 4.0% 4.0%

Share of total services provided Share of total services provided for inhabitants in Russiafor inhabitants in Russia 14.8%14.8%


Russia’s telecommunication Russia’s telecommunication market ($ bn)market ($ bn)

6,9 7,4 6,7

4,15,1

6,6

8,7

12,6

02468

101214

1996 1997 1998 1999 2000 2001 2002 2003



Distribution of sales in Distribution of sales in telecommunication (2003)telecommunication (2003)


Long distance5 %

Intercity13 %

Other12 % Local

23 %

Cellular47 %


Usage of cellular phonesUsage of cellular phones

3,37,8

17,7

36,4

0

10

20

30

40

2000 2001 2002 2003

0 %

5 %

10 %

15 %

20 %

25 %

30 %

Number of users (scale on left - million) Penetration rate (scale on right - %)

Sources: CNews, Solid Invest, ETLA


Russia’s main data transmission linesRussia’s main data transmission lines

Sources: Solid Invest, ETLA


Internet accessInternet access

0,3 0,51,2 1,8

3,1

4,3

6,5

9,6

0

2

4

6

8

10

12

1996 1997 1998 1999 2000 2001 2002 2003

0 %1 %2 %3 %4 %5 %6 %7 %8 %

Internet users (scale on left - million)

Penetration rate (scale on right - %)



Digital access index (2002)Digital access index (2002)

Source: International Telecommunication Union

0,850,78 0,75 0,74

0,67

0,43

0,21

0,04

0,5

0

0,2

0,4

0,6

0,8

1

This index measures the overall ability of individuals in a country to This index measures the overall ability of individuals in a country to access and use new ICTs. It is built around four factors that impact a access and use new ICTs. It is built around four factors that impact a country’s ability to access ICTs: 1) infrastructure, 2) affordability, country’s ability to access ICTs: 1) infrastructure, 2) affordability, 3) knowledge, and 4) quality.3) knowledge, and 4) quality.


Number of ICT-related Number of ICT-related graduates in Russia (2002)graduates in Russia (2002)


Universities Universities 35543554Of this: NetworksOf this: Networks 14511451

Multi-channel systemsMulti-channel systems 11321132

Radio, broadcasting and televisionRadio, broadcasting and television 686686

OtherOther 285285

Technical schoolsTechnical schools 58515851Of this: Of this: NetworksNetworks 23632363

Multi-channel systemsMulti-channel systems 11901190

Radio, broadcasting and televisionRadio, broadcasting and television 512512

OtherOther 17861786


Production of ICT equipmentProduction of ICT equipment


EquipmentEquipment 19981998 19991999 20002000 20012001 20022002

PC (1000 units)PC (1000 units) 6262 6666 7171 136136 186186

Phones (1000 units)Phones (1000 units) 235235 534534 783783 716716 525525

Telephone cables Telephone cables

6060 8686 115115 154154 108108(1000 km)(1000 km)

TV sets (1000 units)TV sets (1000 units) 329329 281281 11161116 10241024 19801980


Sales on ICT market ($ bn)Sales on ICT market ($ bn)

ProductProduct 20022002 20032003

PCPC 11..77 11..88

ComponentsComponents 11..33 11..55

Integrated systemsIntegrated systems 00..88 11..11

General-purpose software General-purpose software 00..66 11.0.0

Custom-made softwareCustom-made software 00..22 00..33

TotalTotal 44..77 55..88Sources: CNews, Solid Invest, ETLA


Main offshore programming centerscenters

Sources: Solid Invest, ETLA


Russia’s foreign trade of ICT Russia’s foreign trade of ICT products ($ mn)products ($ mn)

# HS# HS ProductProduct20022002 20032003

ExportsExports ImportsImports ExportsExports ImportsImports

85178517Electric apparatus for lineElectric apparatus for linetelephony and line telegraphytelephony and line telegraphy

1515 696966 2121 697697

85258525Transmission apparatus for Transmission apparatus for radio-telephony, radio-radio-telephony, radio-broadcastingbroadcasting

3030 536536 2299 616111

85278527Reception apparatus for radio-Reception apparatus for radio-telephony, radio-telegraphy and telephony, radio-telegraphy and radio-broadcastingradio-broadcasting

33 135135 44 115050

90019001Optical fibers and optical fiber Optical fibers and optical fiber bundlesbundles

1414 1166 1144 2121

Sources: UN Commodity Trade Statistics, Solid Invest, ETLA


Russia’s exports of software Russia’s exports of software ($ mn)($ mn)

126

194

350

475

100150200250300350400450500

2000 2001 2002 2003



Future viewFuture view Giant need for information society in a Giant need for information society in a

territorially-giant countryterritorially-giant country (e.g. news service, e-government, (e.g. news service, e-government, e-commerce, e-education & training, e-medical services, etc.)e-commerce, e-education & training, e-medical services, etc.)

eRussia 2002-2010 –programme: a necessary but eRussia 2002-2010 –programme: a necessary but not a sufficient step forwardnot a sufficient step forward (total budget $ 2.6 bn)(total budget $ 2.6 bn)

Large investments requiredLarge investments required (e.g. educational system, R&D, innovation funds, etc.)(e.g. educational system, R&D, innovation funds, etc.)

Co-operation with leading foreign corporations, Co-operation with leading foreign corporations, universities, and research institutes neededuniversities, and research institutes needed(e.g. EU-Russian common space of research and education)(e.g. EU-Russian common space of research and education)


Some advantages of information societySome advantages of information society Improving competitiveness of the Russian economyImproving competitiveness of the Russian economy

(e.g. time savings, free information access, increasing quality of decision-making)(e.g. time savings, free information access, increasing quality of decision-making)

Efficient tool for administrative reformEfficient tool for administrative reform(e.g. efficient communication and control system, information transparency, (e.g. efficient communication and control system, information transparency, distribution of best practices)distribution of best practices)

Increasing quality of life, particularly in peripheral regionsIncreasing quality of life, particularly in peripheral regions

Increasing equality between regions and citizensIncreasing equality between regions and citizens

Increasing unity and stability of the countryIncreasing unity and stability of the country

Enhancing free information flows Enhancing free information flows (i.e. good for democratic development of the country)(i.e. good for democratic development of the country)


Conclusion: Russia – on the way Conclusion: Russia – on the way to an information society?to an information society?

Hopefully, Hopefully,

Russia is on her way to Russia is on her way to

an information society an information society

……

not on her way to not on her way to

a formation society a formation society

with less emphasis on democratic developmentwith less emphasis on democratic development

www.tukkk.fi/pei/e russia - on the way to an information society? prof. kari liuhto director...

Documents

telecommunication market

bn sources

ppp source

long distance5

us territorythe russian

fixed capital stock

fipeiethe annual conference

good years