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NATIONAL COUNCIL FOR SOVIET AND EAST EUROPEAN RESEARC H TITLE : CENTRAL DIRECTION OF RESEARCH AN D DEVELOPMENT : USSR AUTHOR : Vladimir Kontorovich Haverford Colleg e CONTRACTOR : Yale University PRINCIPAL INVESTIGATOR : Peter Hauslohne r COUNCIL CONTRACT NUMBER : 803-1 8 DATE : November 199 0 The work leading to this report was supported by funds provided b y the National Council for Soviet and East European Research . Th e analysis and interpretations contained in the report are those o f the author .

Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

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Page 1: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

NATIONAL COUNCIL FOR SOVIET AND EAST EUROPEAN RESEARC H

TITLE : CENTRAL DIRECTION OF RESEARCH AN DDEVELOPMENT : USSR

AUTHOR : Vladimir KontorovichHaverford Colleg e

CONTRACTOR : Yale University

PRINCIPAL INVESTIGATOR : Peter Hauslohner

COUNCIL CONTRACT NUMBER : 803-1 8

DATE : November 1990

The work leading to this report was supported by funds provided b ythe National Council for Soviet and East European Research . Theanalysis and interpretations contained in the report are those o fthe author .

Page 2: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

NOTE

This Report is one of a series of .papers prepared in an interdisciplinaryresearch project on the political economy of the USSR, presented at aworkshop in March 1989, and in most cases updated since then . Almost allof the papers will be published by Cambridge University Press in a volum eentitled "Political Control of the Soviet Economy", David R . Cameron andPeter Hauslohner Eds . forthcoming.

Page 3: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

Table of Content s

1. Introduction .

2. Performance of the Soviet R&D sector : an overview .

3. Productivity lag in R&D and in other sectors .

4. Causes of low productivity in R&D 1 1

4 .1 Direction of basic R&D 1 34 .2 Direction of applied R&D 1 74 .3 Coordination within the R&D sector 2 94 .4 Individual incentives 3 4

5 . Why Soviet R&D lags behind the West more than othe rsectors : summary 3 8

6. Reform and the prospects for R&D productivity . .

4 1

1

2

5

BIBLIOGRAPHY 45

Page 4: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

1 . Introduction .

The distinguishing characteristic of modern economic growth i s

its "extended application of science to problems of economic pro-

duction ."' Science is no less important for the modern military .

The governments of all developed countries recognize the role o f

science in this regard and attempt to promote its progress . There

has been an explosion in the amount of resources allocated to re -

search and development since World War II . The Soviet state ha s

long recognized the crucial importance of science, allocating a

large (by international standards) and an increasing share of nati -

onal income to, this sector . The efforts to harness the power o f

science to achieve the economic and military objectives of th e

Soviet state has been described as "combining the scientific-tech -

nological revolution with the advantages of socialism ." 2 Unti l

very recently, the central direction of the economy has been con-

sidered chief among those advantages . As in the rest of the econo -

my, the central direction of R&D is effected through a hierarchica l

organization .

This paper presents evidence on the comparative performance o f

R&D under central direction in the USSR, and under alternative re-

gimes in developed capitalist countries . Differences in perfor-

mance are then traced to particular differences in the organization

of the sector under socialism and capitalism . The paper conclude s

with a discussion of the prospects for reform of Soviet R&D .

1Kuznets , 1966, p. 9.

2 E . g ., Berri, 1973, p . 134 .

Page 5: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

2 . Performance of the Soviet R&D sector : an overview .

The purpose of research and development is the production o f

new knowledge . The quantity of knowledge produced per unit o f

resources employed in R&D characterizes the productivity of thi s

sector . (The use of standard terminology of -production theor y

should not obscure the fact that the process of producing knowledg e

is different from producing goods and services . 3 Indeed, this i s

one of the main points of this paper .) Here we are attempting to

compare the productivity of centrally directed Soviet R&D with tha t

of decentralized research sectors of capitalist countries . Thi s

raises a number of conceptual and measurement difficulties .

The measurement of inputs into R&D is relatively less contro -

versial than the measurement of outputs, with expenditures on R& D

and/or the number of researchers being generally accepted proxie s

for input . The problems with input data are similar to those wit h

other types of aggregate economic data . For example, definitions

of statistical concepts vary across nations : e . g ., persons, count -

ed as researchers in one country, are not counted in another . Re-

sources that are employed in R&D outside of formal institutions ar e

not counted, as is the case with informal activities in nationa l

income and other types of statistics . Inputs are not adjusted for

quality, but this only means that variations in quality of resear -

chers and instruments are reflected in productivit y measures.4

'See Kontorovich, 1987, ch . 2

On the general problems of measurement of R&D input an doutput, see Falk, 1982, and Miller, 1982 .

Page 6: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

The problems with measurement of the output of R&D are peculi -

ar to this sector . There is no measure of newly produced know -

ledge . Studies comparing output of R&D across nations resort t o

such quantitative characteristics of output as patent counts, num -

ber of innovations, and bibliometric data . 5 None of these series

measures advances in knowledge, but each one is related to a broa d

subset of such advances, and can serve as their indicators . An in-

dicator, such as a patent count, is a function of the true outpu t

measure and a random disturbance . In order to separate the chang e

in output from noise, several different indicators need to b e

used .6 Intuitively, one can see how the use of several indicator s

together remedies such common shortcomings as incomplete coverag e

of R&D activity and lack of recognition of the variable importanc e

of particular results . Patent data relate mostly to applied R&D ,

while bibliometric data cover pure science better than applied .7

Citation data provide a check on the quality of publications ; ex-

pert evaluations and savings from implementation (in the Sovie t

case) do the same for inventions data . 8

Just as in the case of R&D inputs, the exact meaning of outpu t

5E . g ., Brooks, 1986, pp . 139-145 ; OECD, 1988, p . 44 .

6On the methodology of using output indicators, see Pakes an dGriliches, 1984, pp . 55-61 . Also, Pavitt, 1982, p . 34 .

7We use the term "patent" here to denote Soviet domesti cinventor's certificates .

8 E . g ., Comanor and Scherer, 1969 ; Soete and Wyatt, 1982 ;Evenson, 1984, pp . 107-114, and other papers in Griliches, 1984 .

Page 7: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

indicators varies across nations . However, it is not feasible t o

reestimate indicators of one country according to definitions o f

another . Rather, one should keep in mind the likely direction o f

bias engendered by different definitions . In our case, patent sta-

tistics biases comparisons in favor of the USSR . - Soviet firms have

a strong incentive to patent all their inventions (the number o f

patents is one of the plan targets), while capitalist firms ma y

have reasons to rely on secrecy instead of patent protection fo r

their R&D results . On the other hand, citation data are believe d

to be biased in favor of English-language publications, hence ,

against the USSR in comparisons with English-speaking countries .

With these qualifications in mind, we present a summary of evidenc e

on comparative productivity of Soviet R&D .

There is a general agreement among the experts that producti-

vity in the Soviet R&D is lower than in the developed capitalis t

countries . The Soviet Union spends as much as the United States o n

pure science, but it lags behind significantly in terms of achieve -

ment . 9 The R&D effort in the Soviet machine tools industry wa s

found to be proportionately much larger than that in the same sec -

tor in Britain, though the latter was more advanced . A study by

the State Committee for Science and Technology of the USSR foun d

the Soviet establishments of applied R&D to be overstaffed compare d

to similar institutions in the developed countries .10 The evidenc e

9 Gustafson, 1980, p . 3] .

10Berry, 1982, pp . 99-100 ; Berry and Cooper, 1977 ; Pokrovskii ,1983, p . 80 .

4

Page 8: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

presented in the next section strengthens this conclusion .

In the last 25 years, R&D productivity has been falling, an d

possibly lagging farther behind the West . Many leading Sovie t

scientists argue that Soviet achievement in pure science in th e

last twenty years increasingly lags behind that of the West . 11 The

decline in productivity of applied R&D can be deduced from th e

Soviet data on patents and prototypes of new equipment and instru -

ments, and from other information on thi s sector.12

Productivity lags behind the West more as one moves from theo -

retical to empirical research, and from pure science to applie d

R&D.13 This view is supported by the variability of the reciproci -

ty ratios of citations across different fields, and by the relativ e

number of periodicals in science and technology in the US and th e

USSR, presented below .

3 . Productivity lag in R&D and in other sectors .

Since the Soviet economy as a whole lags in productivity be -

hind the developed capitalist economies, it is not very surprisin g

that the productivity of R&D also lags . This may reflect just th e

general condition of the economy, and have nothing to do with spe -

cifics of production of new knowledge and the organization of thi s

activity in the USSR .

11Frank-Kamenetskii, 1988, p . 634 ; Sagdeev, 1988 ; Gol'danski iand Osip'ian, 1989 ; Marchuk, 1989 .

-See Kontorovich, 1987, and 1989 .

13Gustafson, 1980, p . 32 .

5

Page 9: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

The extent of the lag varies across sectors, with industr y

lagging relatively less, and agriculture relatively more, than th e

whole economy (see Table 1) . Soviet railroads may even have a

higher level of productivity than in th e US.14

Table 1 . Soviet productivity level as a percentage of the US .---------------------------------------------------------------- -

Material

Non-farm

Industry Agricul -production

sector

tur e---------------------------------------------------------------- -Output per worker :1960, 1 44 2 01960, 2 26-41 33-58 6 11987, 1 55 2 5

Factor productivity :37-52 44-68 6 81960, 2

1970s, 3 50----------------------------------------------------------------- -1 : Soviet official estimates, Narodnoe khoziaistvo SSSR v 1987 q . ,p . 623 . 2 : Bergson, 1978, pp . 88, 111 . 3 : Johnson and McConnell ,1983, pp . 144-149, relative to comparable regions of the US an dCanada .

The main cause of the variations in productivity lag acros s

the sectors is the variable success of applying central directio n

to different production technologies.15 If Soviet R&D lags behind

the West less than does the economy as a whole, this would sugges t

that central direction is relatively more appropriate for this sec -

tor .

We will infer the productivity differential in R&D by compar -

ing ratios of inputs (Soviet/Western) to ratios of output indica -

14According to the official Soviet data, labor productivity i nthe railroads is almost as high as in the US, and traffic per mil eof track (a major element of capital stock) is much higher .

15See Kontorovich, 1988, p. 882-3.

6

Page 10: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

tors . There are two alternative estimates of the number of scient -

ists and engineers in Soviet R&D according to the US definition .

They show that the USSR overtook the US in this respect in th e

early or late 1960s, and by the late 1970s had 60-100% of the US

number . 16 Soviet R&D expenditures exceeded those in the US in the

mid-1960s, and were about 50% higher in the late 1970s . 1 7

If inputs in Soviet R&D are larger than in the US, outputs are

smaller . In 1961, according to a world census of serials, the USS R

had slightly more than one-third as many scientific and technica l

serials as did the US (while the USSR had more science periodical s

than the US, it had far fewer technical periodicals) . The number

of Soviet periodicals was even lower than the totals for most deve -

loped countries with much smaller R&D establishments.18 The mos t

comprehensive collection of active scientific and technologica l

serials in the world, the British Library Lending Division, con-

tained 2 .5 times more American journals than Soviet ones i n 1973.19

These data imply roughly 2 .5-3 times lower productivity in Sovie t

R&D .

The number of serials is restricted by administrative deci-

sions taken outside of the R&D sector . Many research results may ,

16Low estimate - Nolting and Feschbach, 1981, p . 44 ; highestimate - Campbell, 1978, p . 38 .

"Campbell, 1978, p . 24 ; 1980, p . 28 . Soviet expenditures ar eadjusted to conform to the US definition, but the comparison i sstill very tenuous, as explained in the source cited .

Parrott, 1981, p . 19 . The USSR had more scientific serial sthan the US, but far fewer technical serials .

19 Frame and Prokrym, 1981, p . 159 .

7

Page 11: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

therefore, remain unpublished . Let us assume that the actua l

Soviet R&D output is larger relative to that of the US than indi-

cated by the publications . Some of the results that would hav e

been published in the US are not published in the Soviet Union fo r

lack of space . It is reasonable to assume that the results that d o

get published are relatively more significant . Then Soviet pub-

lications should be more frequently quoted (assuming similar dis-

tribution of the quality of scientific results in the two count -

ries) .

Citations data, presented below, do not bear out thi s

conjecture .

A Soviet study of citations-for the mid-1960s found that th e

USSR, while producing 20% of journal articles, was receiving onl y

3-4%, and never more than 5 .5%, of world citations.20 By contrast ,

the shares of English- and German-language citations is close to

the shares of their respective publications . A very low number of

citations of Soviet papers was also found by a study of th e

world's most highly cited papers .21 This holds true for al l

fields, and was confirmed by a number of other studies . 2 2

A study of scientific citations across the nations found tha t

the Soviet works were the least frequently cited, and depended re -

latively more on foreign-generated knowledge, than those of the US ,

UK, FRG, France, Japan, Canada, and the group of all othe r

20Nalimov and Mul'chenko, 1969, pp . 139-48 .

21Narin et al., 1983, p. 309 .

22Reviewed in Narin et al ., 1983, p . 310 .

8

Page 12: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

countries in 1973-74 . 23 In 1976, the ratio of USSR citations o f

US publications to US citations of USSR publications (the reciproc -

ity ratio) was close to 1 in mathematics . The two countries ex -

changed equivalent amounts of knowledge in this field . The rati o

was 1 .7-1 .8 for physics and earth and space sciences, 2 .5 fo r

chemistry, 2 .9 for biology, and 3 for engineering and technology ,

indicating different lags of the respective Soviet fields behin d

the American ones . The overall US/USSR reciprocity ratio (2 .37) i s

significantly larger than corresponding ratios for the US and U K

(1 .14), West Germany (1 .7), France (1 .8), Japan (1 .64), and Canada

(1 .19), indicating indirectly the Soviet lag behind these count-

ries . The number of scientists per one publication cited in the U S

is below 1 in English-speaking countries, below 2 in Germany an d

France, 4 .76 in Japan, and 53 (!) in the Soviet Union . 24 The pro-

ductivity differential between the USSR and the West in terms o f

citations is larger by an order of magnitude than the differentia l

in terms of publications .

The last indicator of output at our disposal is the number o f

patents granted . In the USSR in 1980, this indicator per scienc e

worker was significantly lower than in France and Japan, somewhat

lower than in Germany, and commensurate with that in the US and

UK . 25 Yet the novelty or importance of a Soviet patent is signifi -

23Burke and Price, 1981, p . 371 .

24 Kruse-Vaucienne and Logsdon, 1979, pp . 4-6 .

25 Kontorovich, 1987, p . 8, and Evenson, 1984, p . 113 . ForWestern countries, input measure used is the number of scientist sand engineers . It is broader than the Soviet measure of science (cont. p.10 )

. 9

Page 13: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

cantly lower than that of the Western patent . This is recognized

by both Soviet and Western experts, and is reflected in the ga p

between the ratio of patents obtained by Soviet nationals abroad t o

domestic patents, and similar ratios for developed countries . 2 6

In 1980, this ratio was O .028 in the USSR, 1 .46 in the US, 2 .16 in

UK, 0 .54 in Japan, 1 .48 in France, and 3 .43 in Germany . 27 If thes e

ratios are used for adjusting the number of patents for quality ,

the productivity of Soviet R&D in terms of patents would be smalle r

by two orders of magnitude than in the US .

There is a great deal of uncertainty involved in comparin g

Soviet and US productivity levels in industry and agriculture .

There is also a great deal of uncertainty in the estimates of com-

parative productivity in Soviet and US R&D . Comparing productivity

lags in R&D and other sectors compounds the uncertainty even fur-

ther . It would make no sense to try to compare the productivit y

lag in R&D with that in industry . For our purposes, it is enoug h

to know whether R&D productivity is larger or smaller than the ave -

rage for the economy . Productivity in the Soviet "material pro-

duction " sectors is 2-4 times lower than in the US, according t o

the estimates in Table 1 . Productivity in Soviet R&D is lower b y

an order of magnitude or two than in the US, according to the cita -

tions and quality-adjusted patent data presented above . Producti -

1 0

workers, so that Soviet productivity is upwardly biased in thi scomparison .

26Minin, 1980, p . 82 ; Evenson, 1984, p . 96 .

Evenson, 1984, pp . 93-5 .

Page 14: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

vity estimates for Soviet material production and its sectors ar e

too high, because the relative size of the Soviet GNP is exaggerat -

ed . 28 But the likely magnitude of the correction for this bia s

does not even begin to close the gap between the productivity lags

in R&D and elsewhere . Productivity lag in R&D appears to be muc h

larger than in the other sectors . 29 In the remainder of thi s

paper, we will be trying to explain why this is so .

In fact, the crude measurement exercise that we have just car -

ried out suggests one explanation for the comparatively larger lag

in the productivity of Soviet R&D . Foreign citations and patenting

represent direct valuation of Soviet R&D output in the internation -

al "market" for knowledge . In this market, only the best products ,

i . e ., the latest, the most original results, have any value a t

all ; there is no demand for slightly substandard products . This i s

different from the international market for goods, where lowe r

quality goods can still find their buyers, if at reduced prices .

All sectors of the Soviet economy have difficulty in producing out -

put to international standards . But for R&D, being slightly behin d

matters more than for shoe manufacturing or the tractor industry .

This difference in valuation is quite appropriate for the nature o f

outputs being valued .

4 . Causes of low productivity in R&D .

In a pioneering study, Thane Gustafson sought the causes o f

28 See, e . g ., Ericson, 1989 .

29The same conclusion has been reached by Khanin (1989) .

11

Page 15: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

low productivity of Soviet science in the organization of this sec -

tor and of the economy of which it is a part . He found the mai n

unit of research, the institute, to possess a host of productivity -

retarding characteristics : block funding ; narrow specialization

that concentrates much of the national effort in a certain field i n

one institute ; hierarchical structure within the institute, wher e

access to resources and freedom to choose research topics are re -

served for those occupying higher ranks ; low turnover of institute

heads ; their limited power to fire and hire ; and slow promotion .

The results are attenuation of competition, log-rolling, persis-

tence of barren and exhausted research directions, and underuti-

lization of the talents of youn g scientists.30

This paper also seeks the causes of low productivity of R&D i n

the organization of this sector . The organization of R&D has to

perform three functions : direct R&D efforts towards the socially

desirable objectives ; establish a division of labor within the R& D

sector ; and create incentives for individuals to realize their abi -

lities . 31 We briefly describe how each of these functions is orga -

nized in the West, and why it is so organized . In most cases, in-

stitutions described are those of the US . (American R&D, the mos t

productive in the West, is also organized somewhat differently tha n

in most other Western countries . 32 ) We then describe the Sovie t

30Gustafson, 1980 .

''31The fourth function, providing the R&D sector with necessaryinputs from the rest of the economy (educated manpower, materials ,instruments, etc .) is not considered here . See Gustafson, 1980 .

'32Brooks, 1986, pp . 140-1 ; OECD, 1988, p . 44 .

1 2

Page 16: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

organization and analyze its impact on productivity .

4 .1 Direction of basic R&D .

The resource allocation mechanism in pure science does not fi t

the dichotomy of markets and hierarchies . Results of pure science

are a public good, and the market mechanism can be expected to al -

locate less than an optimal amount of resources to this area . 3 3

There is widespread agreement in the West that basic researc h

should be financed out of the government budget . Yet hierarchies ,

so common in administering the production of other public goods ,

are much less prominent in pure science . 3 4

Hierarchical organization performs well when both the objec-

tive and the means of reaching it are known to a single authority .

Yet there is an extreme degree of uncertainty in pure science abou t

the final result and the ways of achieving it . 35 Information abou t

the promising directions of research is dispersed among the scien -

tists themselves . An efficient allocation mechanism would there -

fore give scientists a large role in the process . This is accomp-

lished through various forms of peer review . 35 Participants i n

peer review are free both from the discipline of market competition

and from hierarchical supervision . What keeps their self-seeking

behavior in check and makes their collective opinion a reliabl e

33Brooks, 1986, p . 148 ; Nelson, 1978, p . 65 .

34Arrow, 1974, p . 64 .

35 See, e . g ., Nelson, 1984, pp . 7-8 .

36Nelson, 1978, p. 65; OECD, 1987, p. 10 .

13

Page 17: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

guide for resource allocation? As in the other situations whe n

organizational controls over an activity fail, social norms, and i n

particular, professional ethics, fill the void . 37 Ethics is the

crucial element that makes peer revie w work.38

The direction of pure science in the USSR is similar to tha t

in the West in recognizing the large role of scientists in direct -

ing science . It is radically different in that this "self-govern-

ment" is conducted within a mammoth centralized hierarchy subjec t

to the close supervision of the party . To the degree that the par -

ty allows scientists to govern science, they do it as bosses ,

rather than a s peers.39

The Academy of Sciences of the USSR, charged with conducting

basic research, is subordinated directly to the Council of Minist -

ers . It is a "ministry of science", alongside ministries of coal ,

automobiles, etc . Academies of Sciences of the other fourteen

Union republics play analogous roles on the local level .40 The

Academy is ruled by the Presidium, which has four sections, over -

seeing 16 divisions along the lines of scientific disciplines, plu s

multidisciplinary Siberian and Urals divisions . Sections were

created in the late 1960s to cope with the growing number of divi -

sions, reflecting the increased specialization of research . R&D

1 4

37Arrow, 1969, p . 62, and 1974, p . 64 .

38OECD, 1987, p. 11 .

-The important issue of party control over science is no tanalyzed here .

40 Beliaev and Pyshkova, 1979 .

Page 18: Central Direction of Research and Development; USSR · 1. Introduction. 2. Performance of the Soviet R&D sector: an overview. 3. Productivity lag in R&D and in other sectors. 4. Causes

establishments (institutes) are subordinated either to their par-

ticular divisions, or directly to the Presidium, or to regiona l

centers and branches, or disciplinary centers, most of which wer e

developed over the 1960s and 1970s . Centers are subordinated

directly to the Presidium, while scientific guidance is conducte d

by the divisions responsible for a particular discipline .

Management is very centralized, with the president, vice pre -

sidents, and the chief scientific secretary (all prominent scient -

ists) holding an inordinate amount of power . For example, academ y

members are given foreign currency allotments for subscription t o

foreign scientific literature . When price increases abroad forc e

an increase in the individual allotment, this has to be approved b y

the president himself.41 The director of an institute canno t

change its internal organization without the approval of the cor-

responding division of the Academy and its Presidium . 42 The insti-

tute itself is also very centralized . Purchasing instruments an d

materials, hiring and firing, business trips, and other managemen t

matters of all departments, laboratories, and sectors are decide d

by the institute administration . 4 3

Yet this seemingly tight centralized direction of pure scienc e

in fact turns into a lack of direction for a wide array of pro-

jects . Because of the degree of uncertainty in pure science, men -

41 Ginzburg, 1986, p . 43 . See Ginzburg, 1988, for other ex-amples .

42 Tursunov, 1986 .

43 Leiashvili, 1989, pp . 104-5 .

15

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tioned earlier, those who are supposed to direct do not know wher e

to direct, and end up rubber-stamping suggestions of the directed .

This leads to several counterproductive outcomes . As noted by

Gustafson, many barren or exhausted projects are being continue d

because this suits scientists' interests . 44 The habit of continu-

ing one's own topic, disregarding its status in the field (prema-

ture, or obsolete and exhausted), is so ingrained in Sovie t

scientists that it hampers the adaptation of emigre scientists i n

the West, where mobility among topics is much greater . 45 There i s

also a great deal of spinning the wheels and some outright fraud . 4 6

These consequences of hierarchical failure in R&D will be discusse d

in greater detail for applied research, where they are mor e

dramatic . With all its failings, pure science remains the mos t

productive segment of Soviet R&D . It is the Academy, and not the

applied institutions in the corresponding fields, that is charge d

with solving the most important applied problems . 47 In some

fields, Soviet science is at the forefront of world science . Th e

failure of central direction of science is compensated by stron g

professional ethics .

Institutes of the Academy were usually organized at the outse t

44This is one of the several cases in which our analysi soverlaps with that of Gustafson .

45 See Azbel', 1984 .

46See Ushanov, 1986, for a report of the Academy of Scienc ephysics institute in Moscow that engaged in a fraudulent topic fo ra decade .

47 E . g ., "Rech' tovarishcha Usmanova", 1986 ; "Rech' tovarishchaKonareva " , 1986 ; Bliokov, 1984 .

1 6

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around outstanding scientists, who combined creativity with organi -

zational abilities . The founders selected and promoted their fol-

lowers . The personality of a great scholar would leave an imprint

on the institution . 48 High professional standards are transmitte d

through tradition and maintained by selectivity in recruiting an d

elitism . But the hierarchical structure of the Academy may be de-

stroying the professional standards necessary for carrying ou t

first rate research ." It is argued that people who succeed th e

founders of the institutes are likely to represent a different se t

of values, detrimental to the ideals of science . 50 When this hap-

pens, the last redoubt of serious science is the personal ethic s -o f

the scientist . "Choice of direction and method of research, depth

and quality with which it is performed . . . for the most part depend

solely on the personal honesty and decency of the researcher . . .51

(I-n general, the economic importance of personal ethics in a

command economy is greater than in a market one . )

4 .2 Direction of applied R&D .

In capitalist economies, applied R&D is carried out largely i n

the laboratories of industrial firms . 52 Soviet applied R&D is als o

48Frank-Kamenetskii, 1988 .

49 Interaction between institutions and professional ethics i san important, but largely unexplored issue .

50 ibid .

51Leiashvili, 1989, pp. 103-4 .

52 Nelson, 1978, p . 67 .

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subordinated to the producers, either ministries or enterprises .

Organizational proximity to production makes R&D more responsive t o

the needs of the users, and facilitates transfer of R&D result s

to the plants .

The main difference between the two systems in the organiza-

tion of applied science is the motivation of the users of its re-

sults . Capitalist firms undertaking R&D are driven by market com-

petition . In a command economy, there is no particular pressure o n

producers to innovate in order to cut costs or provide new product s

for customers . Production enterprises are interested in innovati-

ons that make their work easier, e . g ., ones that free them from

reliance on hard-to-get inputs, or make the production process mor e

reliable and predictable . They would accept innovations that sav e

current costs without a major overhaul of the existin g structure.53

Lack of interest in technological progress means lack of interes t

on the part of industry in the quality of output produced by the

R&D sector . {This, again, should be qualified ; no one wants t o

work with faulty, unintelligible designs . )

The ministries are charged with long-term technological polic y

in their sectors, and R&D institutions are supposed to help develo p

and realize such a policy . Yet ministries have the incentives tha t

are very similar to those of the production enterprises . They are

responsible to the superior administrative bodies (Council of Mi -

nisters, Central Committee) for meeting short-run production tar -

gets of their sectors and therefore, largely independent of thei r

1 8

53 "Tekhnologicheskii . . .", 1986, p . 49 .

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customers . The ministries tend to neglect any concerns above an d

beyond their narrowly defined responsibilities, to the detriment o f

national goals and overall efficiency (so called "departmental -

ism") . Ministries obtain their resources for free, and therefor e

are always interested in getting more, but they are not necessaril y

interested in better utilizing what they have . 5 4

These incentives determine the producers' behavior with res-

pect to R&D . Since current production is more important than in-

novation, resources earmarked for R&D are diverted to numb er o f

non-R&D uses . (According to a Gosplan document, ministries are e -

located R&D funds before they compile the list of projects to be

performed . 55 ) To the degree that producers are interested in R&D ,

they direct it towards small, incremental, or even trivial pro-

jects .

Thus, ministries shift part of their administrative work t o

R&D organizations . The latter are charged with preparing drafts o f

reports for superiors, procuring supplies, organizing repair o f

factory equipment ; developing plans and programs ; developing and

implementing sectoral norms and standards, developing draft stat e

standards ; and a large number of other non-R&D functions . 56 Re -search institutes review and approve technological documentatio n

54 On ministries, their incentives, and i nnovation, see Ras -sokhin, 1985, pp . 31-47, and chapter 2 . Scathing criticism of th eministries can be found in the speeches at the 27th party congress ,Pravda, February 26 - March 8, 1986 .

55Vashchenko, 1986 .

56Bekleshov, et al ., 1986, pp . 39, 45, 71 ; Sominskii, 1986 ,p .15 ; Rassokhin, 1980, p . 55 .

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(designs, etc .) for their subsector . For example, a plant that i s

going to produce consumer goods as a side line must have all de -

signs approved at the institute of the corresponding consumer-good s

sector . 57 The use of parts, materials, and devices in newl y

designed products must be approved by the sector producing thes e

items ; the functions of approval are frequently carried out b y

sectoral institutes . 58 Non-R&D tasks comprise 20-30% of the tota l

volume of work of research institutes in industry . 59 A survey o f

about 150 institutes in construction found that they devote an

insignificant portion of their time to their direct duties, bein g

burdened with producing standard designs, and other inappropriat e

tasks . 6 0

The ministries regularly divert resources from testing and

pilot production facilities to regular production . These faciliti -

es have low priority in the allocation of investment funds, receiv -

ing less, than 1% of the total investment in industry . In 4 1

ministries, this figure is 0 .3% of total investment, a proportio n

considered to be far too low for modern industry . 61 Investmen t

57Motorin, 1979 .

58Obtaining approval for the use of a standard bearing in apiece of newly designed equipment requires presenting six document sto the All-Union research institute of bearings for approval . Us eof mixers has to be approved by the research institute for chemica lmachinery . Bykov, 1981, p . 68 .

59 Sominskii, 1986, p . 15 ; Berliner, 1982, pp . 95, 98 ; see als oCherniak, 1985, p . 2 .

60Rassokhin, 1980, p . 55 .

61Anchishkin, 1986, p . 12 ; also, Rassokhin, 1985, p . 93 ;Glagoleva, 1983 .

2 0

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funds that are allocated to testing and pilot production project s

do not command real investment resources to the same degree a s

funds allocated for the creation of production capacities . Con-

struction plans for experimental facilities are regularly under -

fulfilled by more than average margins . 62 Almost every year ,

machinebuilding ministries fail to use all the investment funds al -

located for this purpose.63 The existing experimental and testin g

plants are used mostly for boosting series production, despite ex -

plicit prohibition from doing so . In machinebuilding in the 1970s ,

small series production constituted 30-40% of the output of experi -

mental plants . In the chemical industry, the share of small serie s

production increased by 7% per annum in 1968-1978, while the shar e

of experimental work was declining by 4% a year . In the instru-

ments and computer industry, experimental units of R&D organiza-

tions had 40% of their capacity burdened by extraneous work i n

1975, and this share increased at the rate of 1-2 .5% a year ." The

result has been a large number of applied R&D institutions produc -

ing designs of machines and processes that have never been tested .

Only about half of R&D organizations, and a similar proportion o f

machinebuilding plants, have their experimental production facilit -

ies . Only 30% of design bureaus that were not part of an indust -

62 Ibid .

63Lyskov, 1982, p. 141.

64Rassokhin, 1985, p . 56, 97 ; Bliakhman and Mintairov, 1981 ,p . 92 ; Tverdokhleb and Bialik, 1984, p . 53, quoting M . L . Bashin ,Novaia tekhnika i opytnye predpriiatiia . Moscow : Mashinostroenie ,1979 . Not all of this is the ministrues' fault .

2 1

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rial enterprise had their experimental plants, and these were burd -

ened by routine production . According to some estimates, 20% of

R&D results are not used because of lack of experimenta l plants.65

Local party committees give all organizations tasks unrelate d

to their direct responsibilities . Ministries and enterprises have

their own urgent needs, for which there are no hands available .

R&D organizations and departments of enterprises receive a dispro -

portionate share of such assignments . Designers are used to swee p

the streets and work in construction and agriculture, take turn s

working as blue collar workers, and scrub pots at the plant cafete -

ria, spending 10-15% of their working time thi s way.66

Ministries are not interested in radical innovations, becaus e

they disrupt the flow of current production . Instead, they are in -

terested in minor improvements in existing technologies . There -

fore, ministries orient R&D toward increasingly more applied re -

search, away from research to development, and to increasingly les s

important projects . Preference for smaller innovations with a

shorter payoff period leads to an increase in the number of pro -

jects, which become shorter and more routine.67' Large established

firms in capitalist economies also direct research towards incre -

mental improvement more than toward radical breakthroughs . How-

65Kushlin, 1976, p . 82, 83, 87 ; Glagoleva, 1983 .

66"Tema . . . , 1985, p . 129 ; Kostin, 1983, pp . 26-7 ; Pushkarev ,1986, p . 114 .

67Gatovskii, 1971, p . 130 ; "Politicheskii . . .", 1986 ;Leont'eva,1986;Zavlin and Iudelevich,1985, p. 93,quotingPravda,Jun e23, 1983 ; Kozhanov, 1986 .

2 2

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ever, there appears to be a difference in the degree of improvemen t

sought by the producers in the two systems .

The diversion of R&D resources and trivialization of researc h

are not the only outcomes of direction by a production hierarchy .

Ineffective, purely ritualistic direction gives wide discretion t o

the scientists themselves, a situation that we have already note d

in pure science . A massive planning apparatus tries to ascertai n

that the research and development needs of the government and it s

branches are satisfied by the institutes . The Council of Minis-

ters, State Planning Committee, State Committee for New Technology ,

and the Academy of Sciences are at the top of the planning pyramid .

Ministries oversee the research establishments and direct them to -

ward both the national objectives and specific objectives of thei r

sector . 55 Ministerial supervision over the size and interna l

structure of the institutes, and their finances, is quite tight .

An order (zaiavka) of glavk or ministry is necessary for a project

to be funded and included in the plan of a n institute.69

Yet it turns out that these elaborate planning procedures are

mostly a ritual . The projects originate with the research estab-

lishments, and the planning hierarchy simply rubber-stamps them .

The "Management of sectoral science by ministries and main admini -

strations increasingly degenerates into a mere registration of th e

accomplished facts . The supervising organizations lack expertis e

2 3

68See Nolting, 1978 and 1979 ; Gvishiani, 1973 ; Rassokhin, 1985 ;Bekleshov, et al ., 1986, pp . 92-97 .

69Semykin and Bocharov, 1986.

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to do anything else . Instead, they issue rules and regulation s

prescribing in detail how R&D should be planned and financed, an d

guidelines for reporting, incentives, and controls ." 70

In the beginning of the planning process, R&D organization s

receive only general instructions as to the direction of work an d

problems to be solved . The exact topics are determined by the or-

ganization itself . There is practically no explicit publi c

selection of research topics ; research establishments never propos e

alternative choices . As some science policy analysts in the Wes t

argue, applied R&D should be directed by researchers themselves in -

stead of by the market guidance.72 To a large degree, this is wha t

happens in the USSR by default, because of the failure of the hier -

archical structure to discharge its responsibility .

How do researchers use this discretion? They suggest researc h

topics which best suit the specialization of existing personnel an d

the existing administrative structure of institutions (departments ,

sectors, laboratories) . Whether a particular direction of research

should be pursued at all is very seldom considered . 73 In mos t

cases, this means the continuation of a topic or direction of re -

search . Almost no changes in personnel deployment occur with eac h

70Lebedev, 1986, p . 89 . See also "Ob osnovnykh . . .", 1986 .

71Bekleshov, et at ., 1986, p . 108 ; Shchelishch, 1981, p . 132 ;Vashchenko, 1986 ; Leontieva, 1986 .

72Nelson, 1977, pp . 66-71 .

73Struminskii,1985.

2 4

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new plan . 74 New directions of research are, as a result, slighte d

in favor of existing ones . 75 For example, in one of the leading

institutes of the Ministry of Fisheries, there is a departmen t

developing efficient methods of hunting sea animals . The animal s

themselves have been almost wiped out, and are now protected, no t

hunted . Yet the department continues its topic . 7 6

This is also true for contracts, since many research institu-

tes have stable relations with the same customers over long period s

of time . "Researchers find contracts with the enterprises that ar e

the best for them . The most important project for the sector wil l

be rejected on the grounds that the department [cf the research in-

stitute - V . K .] has already accumulated the required total sum o f

contracts ."77 Enterprises and ministries have funds in thei r

budget allocated for R&D, and must spend these funds in a given pe -

riod if they are to receive a new allotment . Therefore they go

along with the projects proposed by R&D establishments .

Besides inflexible and aging research portfolios, the failur e

of hierarchical direction gives rise to whole institutions spinning

wheels or engaging in fraud, faking research . Here are but a few

examples . The institute for biological testing of chemical sub -

74 The most complete account of project selection in branchministry institutes, based on a survey, can be found in Lakhtin ,1983, pp . 51-58 . Gustafson (1980) paints a similar picture fo racademy institutes .

75 Viunitskii, 1985 .

76 Rassokhin, 1985, p . 259 .

77 Leontieva, 1986 .

2 5

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stances of the Ministry of Medical and Microbiological industries ,

with a staff of over 2000, spent more than 50 million rubles in the

last 12 years, without producing any results . . The All-Union insti -

tute for drilling technology of the Ministry of the Petroleum in-

dustry has for 30 years failed to develop improved drilling bit s

urgently needed by the industry.78 The head experimental-design

institute for straw and grass processing equipment of the Ministr y

of Machinebuilding for livestock farming performed 4 million rubles

worth of work (a two-year budget) without any practical result ,

while the equipment currently produced is obsolete and has not bee n

renewed for 20 years .79 Stories about R&D organizations that d o

not produce anything regularly appear in the press.80 There ar e

also establishments which engage in fraud, distort their reporting ,

or report the same project twice or an unfinished project a s

completed . 81

Direction by the researchers themselves is much less success -

ful in applied than in pure science . Pure science concerns th e

discovery of new phenomena, and scientists are best qualified t o

judge novelty . Applied science is about inventing useful things ,

but only the users can be judges of the usefulness of a product o r

a process . Also, professional ethics, which makes "self-govern -

78 Solomentsev, M . S ., Pravda, March 1, 1986, p . 3 .

79Grishkiavichus, P . P ., Pravda, March 1, 1986, p . 3 .

"See, e . g ., Prokhorov, 1985 ; Varavka, 1986 ; Ryzhkov, 1986 ,pp . 8-9 .

81Shalgunov, 1986 .

2 6

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ment" work in the Academy is much weaker, and often non-existent ,

in applied R&D organizations .

Production enterprises and ministries are not interested i n

technological innovation and therefore mismanage R&D . But the po-

litical leadership is strongly interested in technological change ,

for the reasons outlined in the beginning of this paper . Soviet

applied R&D is strongest in the areas where the political leader -

ship plays the role of the customer : space, military, and othe r

high priority projects . If the Soviet leadership is so intereste d

in technological advances, why can't they be the customers of al l

applied R&D? In order to give effective guidance to a project, a

customer must be well informed both of his own needs and of th e

project's status . Hence the number of projects that can be effec-

tively directed by an interested customer is limited . The politi-

cal leadership can direct only a small share of the total R&D ef-

fort . The rest is guided through intermediaries (the ministries) ,

who, with the exception of the military, lack interest in the re-

sults of R&D .

Success in high-priority R&D does not necessarily mean hig h

productivity . In a centralized system, high priority means no t

only more attentive direction, but also more and better inputs . An

abundance of resources may easily give rise to their wasteful use .

Lower factor productivity in high priority sectors was formall y

deduced from models of command economy .

Emerging empirica l

evidence shows that factor productivity in defense industry sector s

2 7

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is lower than in civilian sectors . 82 The laboratory concerned wit h

preserving Lenin's corpse from decaying in the open air can serv e

as an illustration of the case of high-priority R&D . It achieved

the unique advance demanded directly by the Soviet leadership, but

at a very hig h cost.83

Direct sponsorship by the top leadership might in theory be a

remedy for the failure of the central direction of applied R&D, bu t

it only has limited availability . The imitation of Western R&D is

a much more widely applicable remedy . Western R&D is guided by the

demands of users whose very survival is at stake in the competitiv e

market . By imitating the West, Soviet scientists and engineers in -

directly subject themselves to the same guidance . Soviet applied

R&D is strongly oriented towards copying foreign technological ad-

vances . 84 As a high Soviet official put it, "'Lazy brains', lac k

of initiative, and minimal demands on enterprises for original pro -

ducts, have frequently resulted in a proclivity to copy foreig n

technology . One may even encounter the following opinion concern-

ing novel projects : since there is nothing like this abroad, it ca n

hardly be of any use, it cannot work out . Some research insti-

tutes, instead of conducting advanced fundamental and applied re -

81Ericson,1988;Isaev,1989,p.25 .

83Shestakovskii, 1989 .

84For Western statements, see Sutton, 1968-73, Siemaszko, 1982 ,pp . 249-50 . Soviet references after 1985 are very numerous ; see ,e . g ., Silaev, 1986 ; Kovalenko, 1986 ; Rudoi, 1986 ; Sakharov, 1988 ,p . 52 .

2 8

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search, just copy ." 8 5

Imitation provides only a very imperfect substitute for th e

direction of R&D by domestic industry . It makes one a perennia l

follower . Also, the needs of Soviet users may be quite different

from those in the West . Imitation of Western advances sometime s

leads to adoption of innovations that are not suitable in th e

Soviet conditions, as in the case with industrial robots . 8 6

4 .3 Coordination within the R&D sector .

Within the broad sector of R&D, researchers and institution s

specialize in particular narrow activities : pure or applied re -

search ; design ; testing . The successful performance of the secto r

requires "exchange", or transfer of results of one activity t o

another . In particular, ideas of independent inventors and pur e

scientists have be adopted by industrial laboratories for develop-

ment of usable innovations . Researchers in several fields have t o

coordinate their efforts when the project is interdisciplinary .

Independent inventors are responsible for the disproportionat e

share of major inventions in the West . 87 There are several reason s

85V . Trapeznikov, Pravda, March 20, 1980, quoted in : Rassokhin ,1985, p . 222 .

88 E . g ., Koshkin, 1988 ; Volchkevich, 1988 .

87 lndependent inventors include "full-time free lancers, peopl eon university staffs working on other contract or grant-finance dresearch programs, government personnel, and non-R&D business emp-loyees . . . Some of the work of many small-scale industrial opera-tions should also be included because of the similarity of th ekinds of work and factors that motivate it ." Nelson, et al ., 1967 ,pp . 56-58 .

2 9

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for that . Large firms direct their researchers to less risky pro-

jects with shorter expected payoff periods . The bureaucratic rigi -

dity of large research laboratories repels creative individuals .

The potential rewards from a radical invention are much larger fo r

an independent inventor than for a corporate scientist . The multi -

tude of independent inventors makes it possible for a wide variet y

of approaches to be explored under conditions in which the potenti -

al promise of each approach is not known ." On the other hand, in-

dependent inventors usually lack resources and expertise necessar y

for developing their ideas into marketable products . For thi s

reason, the successful developments of independent inventors ar e

often acquired, through licencing or merger, by larger firms, whic h

carry out the final stages of development ." It has been claimed

that independents produce the most radical inventions in the USSR ,

though the basis for this claim is not known . 90 Yet research

establishments in industry are not receptive to the ideas of `

independen t inventors.91

Independent inventors, by definition, are outside of the cent -

ral direction, and this may account for some of the difficultie s

concerning the transfer of their results . Academies, however, are

3 0

88 Hamberg, 1966, Chapter 5 ; Williamson, 1975, pp . 199-203 ;Nelson, 1981, pp . 105-108 .

89See Williamson,1975,Chapter 10 .

90Dudkin and Shimanovich, 1980 .

91Other problems of independent inventors are discussed in th enext section .

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fully within the system . It was intended that Academies would de-

velop new ideas, to be transferred to sectoral institutes for ela -

boration and development . Yet the recommendations of academic in-

stitutes for further development of their results are, as a rule ,

ignored by sectoral institutes . Only 30% of these recommendations

are accepted for further development . 9 2

One reason for the refusal of applied R&D institutions to de -

velop the ideas of outsiders is to suppress competitors so as t o

promote one's own solution . Academic institutes are considered t o

be competitors for funds by the sectoral institutes, jealous o f

outsiders' results and imbued with narrow departmental ambitions .

Not infrequently (according to one account, typically) the head in -

stitute will initially block outsiders' ideas, only to promote them

later under its own name . 93 Another reason for rejecting outsid-

ers' ideas is the orientation of applied R&D towards incrementa l

improvements in technology, explained by the interests of th e

production ministries and enterprises . Utilization of new result s

of fundamental research often requires redeployment of resource s

among topics and organizations, which is hard to manage unde r

current arrangement . Preoccupation with small improvements leave s

few resources

for the development of the results of the Acade-

my . 94

92Sokolov and Reimers, 1983, p . 73 ; "Tekhnologicheskii . . ." ,1986, pp . 55-6 ; Shemiakin, 1986 ; Derevianko et al ., 1985, p . 186 .

.'Rassokhin, 1984, p . 53-55 .

94Bliokov,1984.

3 1

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What allows the applied R&D institutions to successfully re-

ject and even block the results of the outsiders is their monopol y

position in their own fields . It stems from the notion of "unifie d

technological policy ." One of the chief official reasons for orga-

nizing the economy along sectoral lines is that sectoral ministrie s

develop and carry out such a policy for their sectors . 95 Leading

sectoral institutes of the ministries are legally charged with de-

termining the technological policy of the sector . After all, those

who create new technology are the best qualified to evaluate it .

Their statutory task is to conduct intra- and inter-departmenta l

coordination of R&D, and monitor execution of tasks by other orga-

nizations of corresponding specialization or working on the sam e

topic . 98 All research, development, and implementation in th e

field, irrespective of where it is performed, requires their appro -

val ." Thus, all R&D on metalworking has to be approved

(soglasovan) by the Experimental institute of metal-cutting machine tool s

of the Ministry of Machine tools (Minstankoprom) . The enterprises

are often reluctant to experiment with technologies that do no t

originate in the research institutes of their sector . 98 The Mono -

poly position of R&D organizations is but a logical extension o f

the monopoly position of the ministries charged with production o f

95E .

g .,

Rassokhin , 1985, p .

51 .

96Gvishiani,

1973, p . 97 .

97This dates fromPyshkova,

1979,

p .

72 .

98Riabov, 1986.

the late

1950s

- early 1960s .

Beliaev and

32

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certain goods .

R&D performance depends not only on the transfer of result s

between the stages, but also on cooperation of researchers from

different fields at each stage . Since most of applied R&D is plan-

ned and directed by the numerous sectoral ministries, while man y

important R&D problems have an intersectoral nature, the problem of

intersectoral coordination of R&D arises . The main tool for such

coordination is the complex programs, oriented towards the so-

lution of large scientific and technological problems . The Stat e

Committee for Science and Technology (GKNT) compiles such program s

and chooses the establishments that carry out particular tasks .

GKNT has no power over the executors of the programs, who remai n

subordinate to, and financed by, their ministries and academies .

This characteristic of hierarchical organizations renders the pro -

grams largely ineffective . Ministries have to approve programs ,

which gives them veto power.100 Some ministries do not includ e

the program tasks into their own plans (in a fifth of all cases o f

un-fulfilled tasks), and divert program resources to other pur-

poses . Some sectoral R&D institutions do not even know that the y

are participating in a program . Nor is GKNT the best judge of wha t

the important problems are, or of ways for solving them .

The

quality of programs is low : the tasks are formulated in a diffuse ,

3 3

S3 The English-language source on this is Cooper, 1982, pp . 477 -490 .

100Rassokhin, 1985, p. 175.

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abstract way, and often diverge from customers' requirements . 10 1

Another instance of the breakdown of coordination within the

R&D sector is presented by the utilization of scientific instru-

ments . Soviet science experiences a severe shortage of instru-

ments . At the same time, the capacity of moder n -instruments ofte n

exceeds the needs of even the large research institutes . The ob-

vious solution to both problems is renting and timesharing of in-

struments . These are widely practiced in the US . In the Sovie t

Union, renting and "collective use" of instruments were promote d

for several decades, yet success has been only marginal . Insti-

tutes charged with researching important problems are high priority

claimants, and are able to secure instruments for themselves . Once

an instrument is obtained, the owner has little incentive to shar e

its use with others ; indeed, considerations of competition would

lead the owners to deny access to othe r researchers.102

Actors in hierarchies look upward . Their goals, resources fo r

meeting these goals, and personal advancement all come from thei r

superiors . There is little that can be gained from actors on th e

same level of hierarchy, hence the breakdown of cooperation .

4 .4 Individual incentives .

The main input into R&D is individual creativity . Any amount

of funds and any number of personnel can be employed in this secto r

with negligible result, if this crucial input is missing . Creativ -

101Fomin, 1985.

102Kara-Murza,1989;Veingardt and Untura,1988, pp.146-7 .

34

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ity is an attribute of an individual that can be stifled or stimu -

lated by the organizational environment . Here we look at the in-

centives faced by individual researchers both inside and outsid e

the formal R&D establishments .

In the previous section, we discussed the importance of inde -

pendent inventors in capitalist economies, and the difficultie s

that the Soviet independents have with transferring their result s

for further development and testing . There are also significan t

difficulties with patenting and obtaining royalties for independen t

inventors . The patenting system is oriented towards the "planne d

inventions", made in the course of performing a planned R&D pro-

ject . Patenting officials see it as their task to deny a patent t o

an individual inventor . This discourages many inventors .103' A n

individual inventor who disagrees with the expert's ruling on hi s

application finds himself fighting a huge organization . He can

appeal to three more bodies, each of which is, however, subordinat e

to the same State committee for inventions as the original expert .

Negative responses that later turned out to be wrong constitute 1 -

4%6 of positive responses, according to the chairman of the paten t

office.104 But many positive rulings are issued only after a

lengthy dispute between the expert and the applicant .

One of the reasons for the prominence of independent inventor s

in a capitalist economy is the possibility of large monetary gain s

3 5

103Glavatskii, 1982, p . 26 ; Parfionov, 1985 ; " Vklad novatorov" ,1985 ; Danilov, 1980, p . 98 .

104Dudkin and Shimanovich, 1980, pp. 86-9; L'ianov, 1985.

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offered by the market . The incentives for the Soviet inventor are

significantly weaker . The enterprise or ministry that was th e

first to implement an invention has to pay royalties to the inven-

tor for itself and all the subsequent users in other ministries .

The latter have to reimburse the former for the-part of royaltie s

paid on their behalf . But the original users have to pay the ful l

amount of royalties irrespective of reimbursment by othe

r users.105 Therefore, enterprises fail to notify inventors of the

fact of . implementation (as they are required to do by law) and

intentionally underestimate the economic effect of implementatio n

to make royalties smaller.106 Many disputes over royalties of in-

dividual inventors end up in court . The cases drag on for many

years, partly because they require a lot of expert testimony, an d

experts often procrastinate . The Supreme Court of the USSR

instructs lower courts to take the side of inventors . However ,

according to at least one lawyer, courts usually balk at awardin g

the large sums of money involved, and experts, who are intereste d

in repeat invitations, often adapt their findings to the courts '

known bia s

against awarding disputed royalties.107 Apparently, there is no

punishment for managers who refuse to pay royalties . Payment o f

royalties is often delayed for up to 10 years .108 Difficulties i n

3 6

105Sbornik, 1983, p. 319.

106 Reut, 1985 ; also Chubarov, 1984 and Obukhov, 1986 .

107Chertkov, 1985.

'"Parfionov, 1985 ; Orlov, 1986, p . 38 .

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obtaining a patent, getting the industry to develop, test, and im -

plement the inventions, and in getting paid for it, combine to mak e

independent inventors "Soviet martyrs" . 10 9

A large number of scientists in the formal R&D sector fin d

themselves at the bottom of the hierarchical pyramid . As is the

rule in such organiations, the rank and file carry out orders o f

their superiors . Rank and file researchers work on the projects o f

their superiors.110 This means working on a project one did not

choose and does not like . Sociological surveys of researchers in

two institutes found that only 20-30% of the projects were deter -

mined by personal preferences of researchers .111 Working on supe-

rior's projects could be regarded as a necessary period of appren -

ticeship, akin to graduate study in the United States . However ,

two factors do not allow for such a benign interpretation .

The length of the subordinate status is indeterminate, and may

be very long . According to an impressionistic estimate a young per -

son entering science in the 1980s will have to wait 15 years unti l

being able to do independent research . 112 In the institute of the

petroleum refining and petrochemicals sector, researchers are pro-

moted to a higher paying position on average once in 20 .7 years ,

and get pay raises at the same position once in 4 .7 years . 113 I n

3 7

109As termed by Masarskii, et al ., 1989 .

110See " Pochemu stareiut . . .", 1985 .

111 Shcherbakov, 1975, p. 76.

112Gukasov, 1984.

113Kugel' , 1983, p. 41. The data are apparently for the 1970s.

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one eyewitness account of a machinebuilding institute, youn g

researchers were able to advance themselves only in the areas wher e

the older ones completely lacked competence (e . g . , computers).114

Individual

creativity is wasted when researchers spent . the mos t

productive years of their lives working on

projects in which

they have little interest .

The extent of power that bosses wield over the work of rank-

and-file scientists also stifles creativity . Soviet writers speak

of the feudal organization of the research institutes, where hig h

ranking employees are able to appropriate research results of thei r

subordinates in one form or another.115 Superiors routinel y

become co-authors with their underlings, irrespective of their con -

tribution . 116 Superiors are also included in patent application s

for the inventions of their subordinates . Out of all inventors ,

55 .9% were in administrative positions, while no more than 31% wer e

science

workers, engineers, and graduate students.117 The rank-and-fil e

researchers benefit from the situation since they need the sponsor -

114Agursky, 1976, p. 42.

115E . g ., Kara-Murza, 1989, p . 111 .

116Kitaigorodskii (1985), contrasting the organization o fscience in the West and in the USSR, notes that in the West ,scientists have more independence in their research, and scienceadministrators do not become co-authors . See also Kresin (pp .21-2) ; Baram, 1988 .

117Gliazer, 1975, p . 154, quoting G . Gukov, Sotsialisticheskai aindustriia, Aug . 17, 1973 .

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ship of the superior for their own advancement . 11 8

5 . Why Soviet R&D lags behind the West more than other sectors :

summary .

Soviet R&D, like agriculture, performs worse than the rest o f

the economy . Agriculture has been deprived of resources in th e

past, so that its failure cannot be ascribed solely to its presen t

organization . R&D failed despite the high priority accorded the

sector, a tremendous infusion of resources, and high prestige whic h

allowed it to attract the best people. Organizational arrangement s

are clearly at fault here .

The organization of R&D in a capitalist economy is varied :

government financed, largely self-governed pure science ; applied

R&D of profit-seeking industrial firms ; and independent inventors .

Each type of organizations specializes in the functions that i t

performs relatively more efficiently.119 The organization of th e

Soviet R&D sector is much more uniform . Like other sectors of th e

economy, it is centrally directed through a hierarchical pyramid .

Central direction makes sense only if the center knows (or can for -

mulate) operational objectives of economic development and means o f

achieving these objectives . The task is then to deduce appropriat e

subgoals for the sectors, and make sure that these subgoals ar e

met . Specifically, the center must be able to derive the target s

for the R&D sector based on the needs of the economy and th e

" "Kara-Murza, 1989 . P . 1 1 1 .

119Williamson,1975, ch. 10.

3 9

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promise held by various fields of science and technology, an d

direct resources so as to assure that these targets are met .

Soviet arrangements for national planning of science and technolog y

and the notion of a "unified technological policy" for each secto r

embody the belief that the detailed objectives of R&D and means fo r

their achievement are known to the superior administrative bodies .

This belief is expressed in a planning textbook when it states tha t

identifying the main prospective problems of science and technology

and forecasting the time of their resolution can be done with high

degree of reliability at the present time . This certainty about

the future outcomes of R&D stems from the fact that almost al l

research is concentrated in the state institutions, and the

forecast can be based on the plans of thes e institutions.120

If R&D is organized along the same lines as the rest of th e

economy, why is its performance worse? An effective way of orga-

nizing one set of production processes often proves a failure fo r

a different set of technologies . Large supermarkets are much bet -

ter at selling packaged goods than at selling fresh perishable pro -

duce, e . g ., raspberries . Farmers' markets are better suited t o

the latter task . If all retailing is done through the supermar -

kets, one can expect to see fresh raspberries only infrequent -

ly . 121 Central direction is practiced uniformly through th e

Soviet econo-my .

But the main premise of central direction -

knowledge of objectives and means for their achievement - holds t o

Berri, 1973, p . 135 .

See Kontorovich, 1988, pp . 882-3 .

40

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a different degree for different activities . As we mentioned

above, research and development is characterized by a significantl y

greater uncertainty than production . For this reason, it is les s

amenable to central direction than other sectors . If centra l

direction is nevertheless imposed, performance has to suffer .

(Even if the architects of the Soviet system had held less deter-

ministic views of scientific progress, they probably would hav e

been unable to organize R&D differently, given the difficulties i n

running a particular sector of a command economy along non-comman dlines.122

)

Successful R&D projects require direct intervention of th e

highest leadership, which is necessarily limited to a small numbe r

of projects (comparable to a raspberry farm supplying the buffets

in the Central Committee building) ; or tradition, ethics, and se-

lectivity that can only survive in relatively independent, small -

scale institutions . But this is not enough for the needs of th e

modern military and the economy .

6 . Reform and the prospects for R&D productivity .

The story of reforms in the R&D sector is very similar to tha t

for the whole economy . Numerous reforms before 1987 left the sys -

tem described above intact, even when they aimed at radica l

changes . The increase in the rights of directors of applied R&D

institutes decreed in 1967 did not materialize .

The shift fro m

122 Grossman, 1963 .

4 1

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budget financing to contracts in industrial R&D over the 1970s an d

the introduction of intersectoral coordination through program s

were mainly ritualistic changes . 123 In many cases, reform s

actually hurt the performance of R&D . The transfer of the insti-

tutes of the former Technical division of the Academy to industri-

al ministries, merger of research and production units (where no t

ritualistic), and the spread of the system of planning, managemen t

and incentives first tried in the Ministry of Electrotechnical in-

dustry all caused the degradation o f R&D.124

Changes adopted early in Gorbachev's rule had a simila

r effect. Allowing easier termination of designers so as to rais e

salaries of the remaining ones did not work . R&D managers lack in-

centives to terminate unproductive employees, and only insignifi-

cant pay raises can be afforded.125 An increase in the power o f

directors of academic institutes led to a purge of independentl y

minded researchers.126

Since 1987, changes in R&D are becoming increasingly more ra-

dical . Switching applied R&D institutions to self-financing may b e

premature or ritualistic in the absence of markets . Also, even i n

the full-fledged market economies, the profit-making contract re -

123 See Kontorovich and Shlapentokh, 1986, pp . 18-28, onritualistic organizational change and its explanation .

124 Rassokhin, 1985, pp . 105-6, 153-4 ; Khurshudov, 1986 ; Zavli nand Iudelevich, 1985, p . 93 ; Orlov, 1986, p . 36 ; Babanin, 1986 ;Gliazer, 1979, p . 30 ; Lakhtin, 1986 ; Shcherbakov, 1975, p . 113 .

125 M111, 1989, pp . 121-2 .

''`Frank-Kamenetskii, 1988, p .

42

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search firm is not a successful organizational form .127 Emerging

cooperative (i . e ., private) R&D organizations, though still margi -

nal, are apparently very productive . For the first time, Sovie t

inventors obtained an interested customer - cooperative firms . 12 8

For these forms to spread and increase productivity of the R&D sec -

tor, a competitive market economy has to be established .

The President of the Academy of Sciences announced the inten-

tion to supplant the existing rigid centralized system with a flex -

ible one . The future system should have higher "mobility", an d

such features as more varied types of organizations ; financing tie d

to projects, rather than institutions ; alternative sources o f

financing ;a high degree of professional mobility and competi-

tion . 129 These suggestions for reform of pure science sound pro-

mising, but are also exceedingly vague . One would have to see th e

detailed proposals for new organizations in order to pass any judg -

ment . Still, several general considerations may be applied here .

The successful reform of pure science would require the bosses o f

a highly centralized organization to relinquish their power . Ex-

perience tells us that this does not occur easily . Also, the flex -

ible organization of science can only exist within a flexible eco -

4 3

127Nelson et al . , 1967, p . 62 ; Hanson and Pavitt, 1987, pp .14-15 .

128Masarskii, et al., 1989 .

129 Marchuk, 1989 .

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nomy . Professional mobility of scientists presupposes the exist-

ence of a housing market . "Mobility" of organizations (i . e , easy

exit and entry) assumes the existence of a real estate market, mar -

kets for instruments, materials and equipment . While market shoul d

not direct pure science, existence of markets is-necessary for th e

appropriate guidance mechanisms to work .

Establishment of a market economy is a necessary condition fo r

increasing R&D productivity in the USSR . Such an increase in pro-

ductivity would come in part from the reduction in the scope of th e

R&D establishment . Yet this is not the only possible outcome, nor ,

as of today, the most likely one . Today, Soviet R&D becomes smal-

ler without much evidence of productivity gains . Declining GNP ,

accelerating inflation, and increasingly impassable supply channel s

are forcing the decline in real R&D effort . Research organization s

have difficulty in obtaining even those resources that have been

earmarked for them . Highly trained R&D personnel is leaving fo r

jobs in cooperatives.130 As foreign travel restrictions are lift-

ed, Soviet scientists and engineers start to trickle into the West -

ern laboratories . One can expect a substantial exodus of some o f

the best R&D personnel, if Soviet economy continues to deteriorat e

and travel is further liberalized.131 If Soviet R&D gets smaller

4 4

130E. g., Mosin, 1990, Knorre, 1990, Monin, 1990 .

131Katasonov, 1990.

by losing its most productive workers, productivity may actually

decline .

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