Eastern bloc seeks IT industry investment

Two former Soviet states launched fresh efforts to attract foreign investment in their respective IT sectors this week, extending their bids to alleviate their economies’ reliance on commodity exports.

Yesterday, Russian president Dmitri Medvedev visited California’s Silicon Valley – the blueprint for building an IT sector – and lobbied for investment in his country’s high tech industries. Medvedev said he wishes to diversify Russia’s economy, which is still heavily reliant on oil and gas exports.

According to ABC News, the Russian leader raised around $1 billion in investment during his trip, including $100 million from networking giant Cisco.

Medvedev told students at Stanford University that he hopes technology will improve transparency and freedom of speech in the country. “Russia is trying to become an open country,” he said. However, critics questioned whether the success of Silicon Valley could be repeated in Russia without greater openness and a more consistent rule of law.

Russia is often considered a sleeping giant in the IT industry. According to a 2006 report, the country has the greatest number of certified IT professionals after the US and India. This has been attributed to the technical focus of education in the Soviet era. But while Russia’s IT exports grew from $120 million in 2000 to $1.5 billion in 2006, this was just a fraction of its total $303 billion in exports that year.

Also this week, the prime minister of Lithuania visited London in an effort to raise venture capital investment in that country’s IT industry.

Speaking to reporters, Andrius Kubilius claimed that the Baltic state’s government has achieved "big success in convincing multinationals to invest in high-tech in Lithuania. [We have] a very good pool of people in engineering and high-tech" and "good digital infrastructure," Kubilius said.

But he added that Lithuania has suffered from the emigration of skilled workers, much of if to nearby Scandinavia. In a bid to rectify this, the Lithuanian government is currently promoting its own answer to the US’s Silicon Valley – the Santara Valley in the capital Vilnius – where foreign companies are offered hefty tax deductions.

However, Kubilius conceded that recent energy disputes between Russian supplier Gazprom and Belarus – through which Lithuanian gas supplies are channeled – could spook high-tech investors. As a result, he said, Lithuania
would consider alternative energy supplies. "If Gazprom does not fix its ‘price policy’, we will have to look at building our own energy supply."

Last year, Information Age profiled Ukraine’s attempts to grow its IT exports. At the time, some residents hoped that the Ukrainian government’s attempts to diversify its economy away from steel and gas would diminish the political influence of the so-called "oligarchs" that control those industries.

Others were less optimistic, however. "The government mostly doesn’t care about this industry," said Ukrainian IT entrepreneur Vsevolod Gavrilyuk, “because it is a difficult industry to control and to monetise."

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media (now Bonhill Group plc) from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The...

Related Topics