The Hurdles of Modernization: Russia’s Unlikely Path Forward


Russian President Vladimir Putin has long utilized the narrative of modernizing Russia, touting quantitative advancements in various industries as indicators of progress. Yet, the interpretation of modernization in Western contexts contrasts sharply with that propagated by the Russian government. Western researchers, steeped in a stringent understanding of modernization, view Russia as a nation that resolved the challenges of traditional industrialization (part of modernisation efforts) long ago, and Putin’s leadership, while showing increase of some economic figures, has not engendered genuine industrial modernization, nor does it appear imminent.

Modernization traditionally denotes an economic and technological advancement geared towards achieving global competitiveness. However, it also encompasses the evolution of social and political institutions towards the ideals exemplified by developed Western democracies. This ambiguity in the term’s interpretation leads to contrasting uses: from equating modernization with industrialization to associating it with liberalization.

In today’s world, economic modernization transcends mere industrial progress. Merely consolidating institutions doesn’t necessarily foster liberalism. Yet, true modernization necessitates a modern, self-regulating economy, fostering a higher standard of living, competitive industries, integration into global trade, and the ability to introduce domestic technologies into the global market.

Russia, however, treads a different path. In Russia, the core governing practice revolves around the mobilization and concentration of resources. The legacy of the USSR’s five-year plans, which concentrated economic resources based on government priorities, persists in modern Russia. However, the notion of modernization in present-day Russia is more rhetoric than substantive action, primarily serving as a slogan to justify the centralized mobilization of resources without clear, achievable goals.

On May 20, 2023, the Russian Government introduced a new Concept of Technological Development, aiming to strategize modernization amid sanctions and economic challenges. While most countries adopt long-term plans ranging from 15 to 30 years for such ambitious projects, Russia seeks to address its issues by 2030. Yet, the scale of their ambitions, particularly the envisioned transition to innovation-oriented economic growth, appears unrealistically challenging, aspiring to increase innovation activity, volume of innovative goods, and patent applications by substantial multiples within this limited timeframe.

The newly adopted Concept guides future budget allocations and outlines anticipated outcomes. However, skepticism prevails, considering that recent industry growth was a direct result of state-based investments and the reduction in spending on civil scientific research. For instance, the proposed budget for research expenditure saw a downward trend, dropping from 626.6 to 569 billion rubles in 2023, with further decreases to 490 billion rubles in 2024 and 473 billion rubles in 2025.

Among the projected accomplishments, the Concept asserts Russia’s intent to venture into high-tech production and make significant strides in the aerospace industry, despite acknowledged technological deficiencies, particularly in assembling planes and satellites. This grand vision stands in contrast to the stark reality of Russia’s significant technological gap and struggles in modern industries, highlighted by a staggering disparity in registered patent applications, which makes this Concept yet another a slogan to justify resource concentration and mobilization.

In 2000, when Putin assumed leadership, Russia trailed China in registered patent applications by a modest margin: 23.3 thousand against China’s 25.3 thousand. Now, after over two decades under Putin’s rule, the gap has widened dramatically, with Russia lagging significantly behind: 23.8 thousand compared to China’s 1.34 million. This significant divergence underscores the challenging road ahead for Russia in closing the technological disparity and catching up in modern industries.

Moreover, over the past two years, more than 60,000 scientists have departed from Russia, a significant number of whom swiftly secured positions abroad, underscoring their high levels of expertise. Forecasts suggest that by 2030, the country will be unable to compensate for even a fraction of these losses, let alone foster significant technological advancements.

Recent years have seen an exodus of talent from Russia, with over 60,000 scientists and approximately one million skilled professionals seeking opportunities abroad. This brain drain, coupled with a shortage of skilled labor within Russia, poses significant obstacles to the nation’s aspirations for technological breakthroughs.

As of the beginning of the third quarter in 2023, 42% of enterprises reported a shortage of labor. Experts note that in the extractive sector, 16% of enterprises and in manufacturing, 25% expressed limitations on industrial growth due to the scarcity of qualified workers. Russia has attempted to address this deficit through solutions such as extensive reliance on prison labor, importing gastarbeiters, and amendments in labor laws allowing children to work without parental consent. However, these approaches hardly align with a nation aiming for a technological leap in a span of six years.

The deficiency in skilled personnel, including engineers, technologists, and top-tier machine operators, persists. Convicts or imported laborers from countries like Uzbekistan or Tajikistan lack the expertise required in specialized industries. As for the estimated 150 000 convicts to allocate to Russian industries, historical evidence indicates that labor within the Gulag system exhibited productivity levels two to three times lower than free labor.

Russia’s recurrent attempts to resolve issues it has historically perpetuated mirror the command-and-administrative methodologies of the Soviet era. Concurrently, the current authorities exhibit no intention to reinstate the Soviet-era social mobility mechanisms and institutions which had previously facilitated the creation of world-class healthcare and education systems. Instead, they coercively restrict the choices of young individuals, compelling adherence to their imposed norms. This rejection of progressive ideas and development appears as a calculated strategy to retain power, manifesting a manipulative grasp on the population’s aspirations for advancement and progress.

Efforts to combat labor shortages by employing prison labor and amending labor laws reflect a departure from the vision of a technologically advanced Russia. The market demands skilled personnel, not solutions that compromise ethics or skill standards.

The contemporary labor shortage in Russia, so needed for its modernisation, reflects a historical parallel akin to the scarcities experienced during World War I. Back then, nearly half of able-bodied men were conscripted, significantly depleting the available workforce. This led to a surge in labor costs, with the price of labor for landlords and agricultural enterprises increasing substantially within a short span. Similar to the present, landowners and enterprise proprietors sought cheaper labor alternatives, including individuals from different regions or even resorting to the exploitation of prisoners of war.

The historical echoes of Russia’s approach to labor challenges reveal a persistent disregard for human capital, leading to a decline in competence and literacy levels compared to other countries. Similar to the 19th century, where reforms floundered due to the absence of an educated class, Russia today faces internal structural deficiencies hindering true modernization.

An alarming indicator of this decline surfaced in the 2018 Human Development Report from the Analytical Center at the Government of the Russian Federation. The report highlighted poor competencies among Russian adults in technologically saturated environments. Specifically, 33.6% of survey participants lacked basic skills, unable to operate a keyboard and mouse, significantly higher than the 19.5% in OECD countries. Additionally, the report noted that a high percentage of individuals with low literacy levels, 38.7%, were engaged in highly skilled labor. This starkly contrasts with figures in Germany, where only 10.6% exhibit similar traits, and the OECD average of 15.9%.

Russia tried to modernise itself several times. Looking back to the early 19th century, Count Mikhail Speransky proposed reforms to lay the groundwork for modernizing Russia. While these reforms initially hinted at the establishment of a parliament and constitution, and abolition of serfdom, they ultimately failed. Some historians attribute this failure to the absence of an educated class essential for implementing these reforms. Russia lacked the equivalent of the “third estate,” a bourgeoisie and intelligentsia as found in the West, necessary to form a literate officialdom, legislators, and local self-government.

This historical backdrop elucidates a pattern of inadequate human capital hindering Russia’s ability to navigate critical reforms and technological advancement. The absence of a skilled and educated class has historically thwarted progressive reforms, a challenge that continues to reverberate in the nation’s current struggle for modernization.

Russia appears stuck in a cyclic pattern, reiterating historical geopolitical setbacks and facing persistent internal structural issues. Consequently, there’s a consistent need for a modernization narrative, often cited to explain the low income levels among the population. Both in the Soviet era and in contemporary times, the authorities attribute low living standards to technological backwardness. Yet, the Soviet industrial apparatus, while inefficient in some aspects, excelled in fulfilling specific tasks, notably in producing thousands of tanks annually and maintaining reserves for increased production demands.

When the focus shifts to the primary goal of churning out tanks at a rapid pace, the specific technological solutions employed in the USSR prove remarkably effective. The industrial framework of the Soviet Union was well-suited to accomplish the set objectives. The fundamental issue wasn’t the inadequacy of solutions, but the misalignment in goal-setting. The tasks set were inherently flawed.

The prevailing modernisation discourse in Russia conveniently avoids addressing this issue of setting appropriate goals. The problem facing modern Russia doesn’t stem from poor solutions; in fact, the solutions are often more effective than anticipated. The crux of the matter lies in these solutions being tailored to accomplish absurd and unproductive objectives that fail to steer Russia toward a strategic breakthrough.

The path to authentic modernization demands not just technological advancements, but a reimagining of goals and a fundamental restructuring of governance, away from the cyclic echoes of the past. Until this critical shift occurs, Russia’s ambitions for modernization seem trapped in the limbo of unmet promises and unaddressed systemic deficiencies, casting doubt on the realization of a genuinely modern and competitive future.

Vitaly Charushin
Vitaly Charushin
Vitaly Charushin is a Russian pro-democracy activist and member of Advisory Board of Creative Cluster, a French-tech ecosystem partner. He has previously worked at the National Democratic Institute in Moscow.