Eastern Europeans aren’t known for being innovative, but in some ways the stereotype is unfair. Hungarians, for example, invented the ballpoint pen and holography. A Hungarian, John George Kemeny, co-invented the BASIC programming language with American Thomas Kurtz. Hungarians also invented artificial blood and the Rubik’s Cube. Four Estonians designed Skype. Russians were the first in space, made the biggest nuclear bomb, designed Tetris, and created the iPhone of assault rifles (the AK-47).
Considering you need respect for intellectual property and minimal corruption for innovations to proliferate, it’s remarkable that Eastern Europeans have been able to innovate. After all, the region has had a long history of heavy-handed governments and a weak rule of law — a history that persists to this day. Eastern Europe still struggles with widespread corruption.
According to Gallup’s Corruption Index and Transparency International’s Corruption Perception Index, Eastern Europe is significantly more corrupt than Western Europe (although Italy is more corrupt than several Eastern European countries). The indexes conclude that Russia, Ukraine, and Belarus are especially corrupt.
With a weak rule of law to protect patents, inventors take their creativity elsewhere. According to the Levada Center May 2011 poll, 22 percent of Russians said they would like to live abroad. Most of those are young, educated Russians—exactly the people Russia needs to keep. Another Levada Center poll indicated that most Russians didn’t know how to operate a computer four years ago — a higher percentage knew how to sew or how to fix a leaking faucet.
The brain drain and poor intellectual property protection creates a vicious cycle in which companies are unwilling to spend much on R&D. According to the Organization for Economic Cooperation and Development (OECD), in 2008, the percentage of GDP spent on R&D was as follows: Japan 3.39 percent, the United States 2.62 percent, China 1.43 percent, and Russia 1.08 percent.
To change that, Russia is investing billions in the Skolkovo Innovation Center Project, nicknamed Inograd (Innovation City). The groundbreaking is scheduled for May 2012. Entrepreneurs will focus on physics, medicine, energy, and IT. Microsoft, Ericsson, Google, Cisco, Intel, Dow Chemical, and MIT are investing in what many expect to become Russia’s Silicon Valley.