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Soviet Union (former) SOVIET INNOVATION: PROBLEMS AND SOLUTIONS
https://photius.com/countries/soviet_union_former/government/soviet_union_former_government_soviet_innovation_p~1823.html
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Central to an understanding of Soviet science and technology is an understanding of the innovation process. Innovation, which is the transfer of a scientific discovery (new product or process) into production, has long been a problem for the Soviet Union. Despite a strong scientific base, the country has had a mixed record of innovation. Although in some--particularly defense- related--industries Soviet scientists and engineers have scored major technological successes, in many other--particularly consumer--industries they have failed to implement useful innovations. In the late 1980s, the status of innovation was a key concern of the leadership, which sought new policies and institutional arrangements to facilitate the process.

    In the 1980s, several key problems affected Soviet innovation. One was that factory managers had little incentive to introduce new products or processes. Innovation in a command economy differs greatly from innovation in a market economy. In the latter, the drive to introduce technological change emanates from the producers, who attempt to satisfy consumer demand before competitors do. In the Soviet economy, production of innovative products and processes has been assigned by government planners. Producers have been directed by top-level planning organs to incorporate in their plants' output a newly innovated product or process. Yet in the Soviet economy a plant's success has been measured by the gross output required by the annual plan. Factory managers have strived to fulfill the plan in terms of the quantity of goods produced. Managers have viewed introducing a new product or process, which may result in a slowdown in production, as an impediment to their goal of plan fulfillment. They generally have been unwilling to forgo certain success in exchange for potentially greater, yet unguaranteed, future capability.

    Another problem dealt with pricing policies. In the Soviet economy, prices of goods have been determined by central planners rather than in response to market demand. To boost innovation, planners sometimes permitted factory managers to charge higher prices for newly innovated products. These prices often were set too low to compensate for the increased cost of production and for the risk of failure. Therefore, prices have done little to encourage innovation. In fact, according to one Western specialist, this pricing mechanism often has been counterproductive. It promoted a practice whereby managers tended to exaggerate the degree of novelty of a new or improved product to central pricing authorities in an attempt to receive permission to charge higher prices and thus boost profits. Incentives given to industrial research development personnel on the basis of the expected return from a new innovation also have failed to improve the process.

    Yet another problem has been the organizational separation among the various facilities engaged in research, development, and production. The separation occurred because Soviet scientific and technological facilities have tended to specialize in one phase of the research-to-production cycle. Research institutions, design organizations, testing facilities, and production facilities operated independently from one another. As a result, the transfer of a scientific discovery from the necessary development and testing phases to final production has necessitated crossing multiple organizational boundaries. To be successful, such transfers required stringent interorganizational cooperation to ensure proper timing and exchange of information. Soviet and Western observers agree that this cooperation has been generally lacking in the Soviet Union, where institutional interests have tended to override other considerations and information exchange among scientists and engineers has been limited.

    Organizational separation, however, was not limited to the successive stages of the research-to-production cycle. Soviet facilities also were separated in terms of their organizational affiliation. The results of scientific research and design work often must cross organizational boundaries to enter production. This has imposed yet another layer of bureaucracy, which has done little to encourage innovation. The most difficult barrier has been that existing between research institutions subordinate to the Academy of Sciences and production facilities subordinate to an industrial ministry. Even within the industrial ministry system, production facilities subordinate to one ministry have been hesitant to cooperate with those subordinate to a different ministry.

    The ability to innovate also has been hurt by a lack of research and development equipment and of experimental testing and production facilities. Equipment has been inadequate in quality and quantity. The absence of appropriate testing facilities has affected all science and technology organizations but has been particularly evident in the Academy of Sciences organizational network. Academy scientists generally have had to rely on industry to make available testing and production facilities, but, as they often stated in the 1980s, industry did not comply. As a result, academy officials, especially those in the Siberian Division and in the Ukrainian Academy of Sciences, initiated the development of the academy's own experimental facilities.

    Funding has been another key factor adversely affecting innovation. In theory, one of the advantages of a command economy is the ability to concentrate resources in a given area. Over the years, the Soviet Union has repeatedly taken advantage of this ability by focusing resources on technologies and industries considered to have strategic importance, e.g., the military. Yet priority allocation, by definition, has been limited. Not all industries can receive the same attention. Indeed, the Soviet experience has been one in which selected industries and technologies were developed at the expense of others.

    To some degree the innovation problems in the 1980s were a result of deliberate choices made in response to conditions arising after 1917. According to Ronald Amann, a Sovietologist affiliated with the University of Birmingham in England, the early decisions made by Soviet leaders to overcome technological backwardness significantly influenced the long-range development of technology. The decisions were those that focused on replicating Western models instead of developing indigenous technology, that concentrated resources on industries considered by the leadership to have strategic importance, and that compensated for the shortage of skilled manpower by developing specialized and centralized research and development organizations in each branch of industry. These decisions contributed to the evolution of a system that in the 1980s was characterized by uneven technological progress and by the separation of science and production facilities.

    From the mid-1960s to the mid-1980s, Soviet leaders' response to these innovation difficulties has been a series of economic and organizational reforms. They have introduced measures aimed at improving planning and at providing greater financial incentives to organizations engaged in innovation. They also have tried to overcome the barriers separating research, development, and production facilities. The implementation of reforms accelerated under Gorbachev, who viewed the improvement of Soviet science and technology as crucial to his goal of economic restructuring ( perestroika--see Glossary).

    In September 1987, the CPSU Central Committee and the Council of Ministers issued called decree "On the Changeover of Scientific Organizations to Full Cost Accounting and Self-Financing." Basically, the decree changed the way in which all types of scientific organizations were financed. Instead of receiving state funds allocated to finance the operation of the entire organization, scientific establishments would be financed on the basis of specific research, planning, and design projects. These would be arranged through contracts with other organizations, primarily industrial enterprises (see Glossary). The theory behind this change was to encourage scientific organizations to generate a "product" more useful to industry and to assume more responsibility for the applicability of their output. To increase the incentives for assuming greater responsibility, the decree also stipulated that the basic source of an organization's wage and incentive funds would be the profits earned by that organization. A similar decree, the Law on State Enterprises (Associations), was issued at approximately the same time. It granted to industrial enterprises greater authority to manage their own operations and established a closer link between funds for worker benefits and enterprise profits.

    The organizational remedies instituted under Gorbachev expanded several arrangements to attempt to bridge the gap between scientific and production entities. The first involved the scientific production associations (nauchno-proizvodstvennye ob"edineniia--NPOs), which were introduced in the late 1960s. NPOs combined under one management all facilities involved in a particular research-to-production program--the research institutions, design organizations, testing facilities, and production facilities. Soviet leaders considered this arrangement more conducive to innovation because it enabled one leading component, usually the research institution, to coordinate the work of the other components engaged in the process. Although officials admitted that NPOs have had operational problems (such as poor planning and lack of an experimental base), they rated NPOs as successful overall. In 1986 they began an expansion in the number of NPOs. Whereas in 1985 there were approximately 250 NPOs (roughly the same number that existed in the early 1970s), in 1986 there were 400, with an additional 100 projected for the following year.

    A similar organizational remedy was the formation of the interbranch scientific-technical complex (mezhotraslevoi nauchno-tekhnicheskii kompleks--MNTK). Based on so-called engineering centers established in the Ukrainian Academy of Sciences, MNTKs were initiated in 1985. MNTKs differed from NPOs in that they encompassed, as their name implies, facilities subordinate to various administrative authorities, including the Academy of Sciences. MNTKs were also larger than NPOs; in fact, some MNTKs included several NPOs and industrial production associations. In January 1988, Soviet officials reported that more than twenty MNTKs, including approximately 500 organizations and enterprises and elements of more than sixty ministries and departments, had been formed.

    MNTKs were charged with coordinating and performing all the research and development work in their given area, from basic research to production. To facilitate their work, MNTKs were empowered to request resources in addition to those allocated by the plan; to receive priority in establishing pilot production bases and in ordering materials and resources; and to have the right to demand full delivery of the ordered amounts.

    In an assessment of the MNTKs published in January 1988, two Soviet economists discussed the accomplishments of the "Rotor" and "Mikrokhirurgiia glaza" MNTKs. The former had expanded the production of automatic rotary and rotary conveyor lines in 1987 and expected to more than double production in 1988. The Rotor MNTK also developed a rotary conveyor line for the injection molding of items made of thermoplastic materials. The Mikrokhirugiia glaza MNTK was credited with developing a new technology for performing higher quality operations that significantly shortened overall treatment time. On the negative side, however, the economists listed several problems hindering the operation of MNTKs: lack of cooperation of superior organs, substantial lag in the development of experimental facilities, shortage of designers and manufacturing engineers, insufficient authority to make financing, absence of a unified plan for an MNTK, and confusion regarding the composition of MNTKs. Despite these criticisms, Soviet authorities in the late 1980s repeatedly stated their support of MNTKs and presented them as a promising link between science and production.

    Data as of May 1989


    NOTE: The information regarding Soviet Union (former) on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Soviet Union (former) SOVIET INNOVATION: PROBLEMS AND SOLUTIONS information contained here. All suggestions for corrections of any errors about Soviet Union (former) SOVIET INNOVATION: PROBLEMS AND SOLUTIONS should be addressed to the Library of Congress and the CIA.

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