1. MONEY AND POLITICS Jointly with
Discussion Club Harvard Club of Russia
Initiative to support
National Program to Upgrade Human Resources
“Global Education for the Russians"
Moscow, 2010

2. Executive summary
•
1 Russian economy has great potential to grow, which cannot be fulfilled without getting modern
technologies to serve as the basis for the modernization
•
2 Russian educational system alone will have great difficulties in coping with the task to
disseminate quickly modern technologies and views
•
3 Educating their compatriots in globally leading universities and attracting them back to the home
country is an efficient mechanism of modernization, which is however, used to a very limited
extent in Russia, comparing to many successful countries. At the same time countries like China,
USA, India, Brazil and Kazakhstan have stepped up their efforts in such programs
•
4 The Program we suggest will enable to increase significantly the number of Russians studying in
globally leading universities and going back home by financing the education, providing support
with the application process and subsequent job placement. The spending will be highly efficient
as the state will pay for only those who return
•
5 The Program will complement current effort to develop Russian education, as it will increase the
number of young scientist and professors with global education and work experience in Russian
educational institutions
1

3. Russia greatly lags developed countries by labor productivity
Labor productivity
Index; USA = 100%
100 93 78 72
45 26
Economy as a
“The main problem for the Russian whole, 2007
economy today is its extreme
inefficiency. Labor productivity
remains at an extraordinarily low 134 120
level… The main sectors of the 100
Russian economy should achieve 71
at least a fourfold increase in this Retail 25 11
indicator within 12 years" banking,
V. Putin* 2006
100
63 60
21
Construction
2002 2004 2004 2007
*Source: Speech delivered by V. Putin on February 8, 2008, to an expanded session of the State Council on “Russia’s Development Strategy to 2020”
2

4. Russian economy can grow four times if modern technologies* are implemented
through upgrade of human capital
Potential for Russia’s economy growth
through implementation of modern
Labor productivity in Russia technologies
Development stages: (as % of the US 2007):
Growth through innovation
-unlimited
-requires full adoption of modern technologies ∞ INNOVATIVE ECONOMY
Modernization
+74% MODERNIZED ECONOMY
- Labor productivity increase 4 times **
- Requires mass implementation of
**
engineering and managerial
technologies** Efficient and
World-class
Efficient innovative
universities
Government business
UPGRADE OF HUMAN CAPITAL
Utilization of spare capacity «CEILING» OF BACKWARD PERCEPTIONSS – CANNOT BE REMOVED
- Exhausted 26% WITHOUT HUMAN CAPITAL UPGRADE
- Obsolete equipment and technologies hinder
productivity **
Russia, 2007**
*Here and hereinafter by "technologies" are assumed engineering, managerial and institutional technologies
**Source: McKinsey Global Institute, «Lean Russia», 2009
3

5. Powerful instrument to upgrade human capital – invitation of bearers of global
technologies – is not used in Russia
Change in the indicator
х (х) – Previous period
MODERNIZATION
Bearers of global technologies – Universities in BCG Global
Government
educated in foreign universities: The Times Innovation
effectiveness1 Top-100 Index
• 13,6% ministers (incl 2 PhD)
• 9% members of Central Committee of the Communist Party
• 81% members of Chinese Academy of Sciences 35 (46) 6 27
• 9 из 10 most influential economists
• 32 из 39 rectors of Shanghai Universities
• >20% professor of top 10 US universities
9 (9)- 57 8
• 20 из 21 ministers of Singapore
1 (2) 2 1
• >90% of the heads of universities and companies
• <1% officials
• <1% university professors
• PhD in Economics in national government: 0
71 (64) 02) 49
1 World Bank 2009
2 Best Russian university is #214 by quality of publications
4

6. One of the most important tools to acquire modern technologies – education in
global universities – is not employed by Russia
Russia is not a leading country by the number of students abroad
… moreover, is critically behind developed countries1
Students abroad, # Share of students studying abroad, (% of total students of the country/region)
Central Asia
China x15 Western Europe
East Asia and Oceania
USA x5
USA x11
Central and Eastern Europe
China x4
Russia Latin America
Russia
0 100 000 200 000 300 000 400 000 0 1 2 3 4
Russia is a laggard by training of its scientists in global universities 2
Share of students in U.S. PhD programs to the country's population
Selected countries, % Growth of students in U.S. PhD programs in 2000-2008
South Korea x24 300% All countries 68%
Taiwan
Singapore x12 China 90%
Turkey 178%
India
Thailand
Chili 200% Russia -33%
China x3
Top-40 Russia is #34 out of 40,
Italy falling behind both
Germany x2 developed and developing
Saudi Arabia countries
France 100%
Japan
India
Venezuela
Iran
Russia
0%
0 0,1 0,2 0,3 2000 2002 2004 2006 2008
The biggest gap is in the disciplines critically important for the modernization:
In 1992-2007 the number of Russian citizens who received PhD in the USA: in economics - 117; in political sciences and public administration - 21
Source: 1) OECD, UNESCO; 2) Surveys of Earned Doctorates, NSF 5

7. Studying in global universities will enable upgrade of human capital and help
development of the educational system in Russia
Improvement of Russian education
Increased funding for Russian Mass education of Russian citizens in
Hiring of foreign teachers and experts
education global universities
Support by the majority of the Rapid attraction of bearers of Speed
Advantages
academia and society in general modern technologies to Russian
educational system Mass capturing of global
technologies
Low risks of inefficient spending
Long waiting time, especially in Expensive The need to overcome the "myths"
lagging areas (economics, political (see next slide)
science and administration) Complexity of integration into the
Drawbacks
Russian scientific / social Risks of non-return
Requires personnel already in environment (minimized by conditions of financing
possession of modern technologies only if the students return to Russia,
Limited applicability and special types of visas, such as
Risks of inefficient spending J1 visa in the U.S.)
Examples
Necessary but unattainable Accelerated development in Creating a foundation
without the other components limited areas to improve education in Russia
6

8. Russia lags in educating its people in global universities because of a number of
wide-spread myths
MYTHS ABOUT
REALITY
EDUCATON ABROAD
Those who left then returned and founded
This is a “brain drain” “silicon valleys” in Singapore, Taiwan, India
and other countries
MODERNIZATION AND Russian universities in the Times Top100: 0
Russian universities are world-class
INNOVATIONS Quality of publications: MSU – #214
• “Capturing” of global
"Specificity" can be quickly grasped on
technologies and
Not compatible with the specificity of Russia returning home, but acquiring cutting-edge
markets knowledge is difficult in Russia
• Through education in
global universities The cost of the program is less than 1% of
Better to finance the Russian universities budget for education in 2010-13, while it can
• Will require radically improve the education in Russia
overcoming
Students from global universities are a source established Promote stability, ensuring the success of
of instability misconceptions modernization
We are a great country with our own mission –
No success stories in isolation from the world
the others should learn from us
WE DON’T NEED YOU HERE! STUDY AND RETURN!
7

9. Even if not returning straight away, people who received their education in global
universities are a powerful source of network, technology and entrepreneurship
GONE TO STUDY RETURNED RESULTS
Miin Wu did not get back to In 1980s Taiwan actively Miin Wu returned and founded
Taiwain upon graduation from engaged the Diaspora: to the Macronix Co – leader of the
Stanford in 1976. Got 10 years of point of building special kinder Taiwan “silicon valley” Hsinchu
job experience in the USA gardens
Indians became among the leading India started to actively attract them Some returned and founded Bangalor
programmers in the USA back in late 1990s “silicon valley”: 20 largest companies
are founded or governed by the
“returnees”
In 30 years over 1 500 000 Chinese leaders dine in Silicon Valley, 60% of foreign direct investment is
Chinese studied abroad attracting "returnees" home. coming from the Diaspora
Plans to attract 135,000 to the civil China became a leader in car
service manufacturing
«They made their choice. Why should >20% of academic Diaspora
In 30 years around 100 000 left to get we pay them for their return ticket?» publicly asked for an educational
foreign education Difficulty in getting visa reform (2009)
Foreign diplomas are not recognized
Signs of some improvement recently
Foreign Diaspora – strategic asset, heavily invested in by leading players:
In the last 10 years China President of the USA
increased 3 times the number of announced plans to increase
student abroad and the funding number of American students in
for the program China from 33 000 to 100 000
8

10. National programs of human capital upgrade of other countries enable return of the
students and application of the acquired knowledge
Description Enforcement of the Return Results
Brasi • Loans for education abroad • If the student works in Brazil as • About 4000 loans are
through 2 government agencies: many years as he/she spent disbursed annually
National Counsel of Technological abroad the government • There is evidence of
and Scientific Development compensates the loan strengthening scientific links,
(CNPQ) and a branch of Ministry of • Otherwise the student is like increasing numbers of
Education (CAPES) responsible for paying it off foreign professors
Turkey • The Scientific and Technological • If the student returns and works in • Up to EUR 100 MM are spent
Research Council of Turkey Turkey for 2 years the loan is annually on scholarships for
provides loans for those willing to compensated by the state education abroad
get a PhD abroad • The government provides
exclusive managerial positions
and opportunities for career
development
Kazakhstan • «Bolashak» scholarship • A prerequisite for candidates is • Up to 3000 students a year
established in 1993 subsequent employment in receive the scholarships
• Enable students to receive Kazakhstan (budget of USD 100 MM a
bachelor and master degrees and year)
PhD in 630 universities of 32
countries
China • China Scholarship Council (CSC) – • Despite the absence of special • In 2008 ~13000 scholarships
a non-profit institution responsible mechanisms, of the ~ 37,500 granted, 5 times as many as in
for organization and financing of attendees ~36,500 people 1996
foreign education from high school returned, which makes a 97% • In 1996-2008 48 000 people
to post-doctorate studies (over 185 return ratio received education abroad
programs)
9

11. The program can remove most of the obstacles to learning global technologies
DESCRIPTION
1 Attracting scholarship holders: the site
• Social advertising, Internet and
• Dealing with universities to and thefaculty and graduates
Social advertising, Internet attract site
INFORMING • Assistance in roadshows in program, preparation and enrolling
Informational choosing the the regions
• Regional representative offices to to attract faculty and graduates
• Dealing with universities in order
2 • Arranging enrollment planning sessions
• Arranging test solving workshops
PREPARATION • Providing preparatory materials
AND ENROLLMENT • Assistance in getting a loan from a commercial bank
• Examination fees (GRE, GMAT)
• Signing off the educational loan
3 - 50% over 5 years in case of returning to Russia
- 100% over 3 years in case of public service or employment in education and science
ATTRACTION
• Educating high-level public servants abroad
TO RUSSIA
AND EMPLOYMENT • Providing public service vacation list within the attraction program
• Carrere planning assistance
• Graduate club
10

12. The state will pay only if the student returns to Russia
Major stages for the participant 5.1
General admission
General admission
(if TOEFL>215)
(if TOEFL>215)
1 2 3
Getting information
Getting information Getting ready for tests and
Getting ready for tests and Taking GMAT/GRE and
Taking GMAT/GRE and 6
about the options to
about the options to preparing application
preparing application TOEFL, submitting the
TOEFL, submitting the Getting educational loan
Getting educational loan
study abroad
study abroad application
application from banks partnering in
from banks partnering in
5.2 the program
the program
Admission with an
Admission with an
additional language
additional language
tutorial (TOEFL 170
tutorial (TOEFL 170
-215)
-215)
The government finances studying
abroad only if the student returns
to Russia
9.1
8.1 Government repays
Government repays
Employment within
Employment within 50 % of the loan
50 % of the loan
business
business
11
8.2 Obligation to
Obligation to
8 Employment with contribute 100 hours to
contribute 100 hours to
Employment with
Going back to
Going back to scientific // educational 9.2 the Programm
the Programm
scientific educational
Russia within 2
Russia within 2 institutions Government repays
Government repays
institutions
7 years from
years from 100% of the loan
100% of the loan
Studying and
Studying and graduation
graduation 8.3
receiving a degree
receiving a degree
Employment within
Employment within
the govemenr
the govemenr
10 10.3
Repay the loan by
Repay the loan by
Staying abroad
Staying abroad himself
himself
11

13. Program options
1 MINIMUM 2 FULL-SCALE
Vs. number of Sending to study Sending to study
governmental
• 10 000 Russian citizens within the governmental • 30,000 Russian citizens within the governmental
scholarships in other
program program, including
countries in 2011-2013:
• 5-10% top-ranking public servants (3-6 months) • 10-20% top-ranking public servants
Kazakhstan 10 000
Brazil 15 000 Attracting to Russia Attracting to Russia
• 1 000 to public service • 3,000 to public service
China 50 000
• 2 000 to universities • 6 000 professors and scientists
• 15 economists often referred to for designing • 50 economists often referred to for designing
economic policy economic policy
RUB 15 billion* RUB 45 billion
FORECASTED EFFECT OF CLOSING THE INTERNATIONAL EDUCATION GAP VS. OTHER COUNTRIES
Number of students abroad
800 000
China
600 000
USA
400 000 Scenario 2
Russ
200 000 Scenario 1 ia
As is
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
* Less than 1% of 2011-2013 Russian federal budget for education 12

14. Scholarship program success depends on national leaders' support, effective
management and active attraction of scholarship holders to home country
LEADERS SUCCESSFUL IN MODERNIZING THEIR COUNTRIES
CRITICAL PROGRAM SUCCESS FACTORS
LEADER'S SUPPORT REQUIRED Deng Xiaoping ,
China economy growth architect
Mass-scale education abroad is
the strategic task to make
• National leaders who launched the programs of modernization happen Lee Kuan Yew,
learning global technologies went down to history as father of the Singapore economic
wonder
the founders of their countries' success LEADERS MEET THEIR SUCCESSFUL COMPATRIOTS ACROSS THE
• In all these cases, the key to program's success was GLOBE TO ATTRACT THEM BACK HOME
the national leader's support and initiative
« ..scholarship holders... helped turn our port city
into the model economy»
• National leaders – founders of success:
– Appointed program steering committee and Lee Hsien Loong, Singapore prime minister, Cambridge and Harvard graduate
program management with international
experience Our compatriots abroad are the base for
international trade
– Actively attracted technology champions to
public service
Ma Ying-jeou, Taiwan president, Harvard graduate
«..the success of modernizing China is linked to
international education programs.»
Zhang Xinsheng, China deputy minister of education and scholarship
program leader, Harvard graduate
13

15. Next steps (1/2)
For program implementation
Make the decision on Program implementation option
1
Appoint program steering committee and program management with
2
international experience
3 Develop and implement a detailed program implementation plan
www.moneyandpolitics.ru
E-mail: info@moneyandpolitics.ru
14

16. Next steps (2/2)
For program promotion
Sign the attached letter supporting the Program*
1
Propose candidates for supporting the Program to the initiative
2
group
• Communicate your suggestions on the program to the initiative group
3 • Meet the initiative group and/or make a presentation at Money and Politics
Club
www.moneyandpolitics.ru
E-mail: info@moneyandpolitics.ru
15

17. Program council team members E-mail: info@moneyandpolitics.ru
Name Highlights
• McKinsey consultant since 2007. Implemented projects on strategy development for several Russian economy sectors
and enhancing operational efficiency for major Russian industrial and energy companies
Alexander
• Worked in the USA in telecommunications and other communications management area for two years
Leonov
• Graduated from Moscow Institute of Physics and Technology and the Business School at Moscow Institute of Physics
and Technology / Academy of National Economy
• Worked as the director of research and portfolio manager at Marquardt Spectrum investment fund, senior analyst at
CERA, as well as at RAO UES of Russia as head of expert group for the developing a competitive market for electrical
Valentin energy in CIS
Preobrazhensky
• Master of Finance degree from New Economic School; Maser of Management and Bachelor of Economics degrees
from Higher School of Economics, additional education: Harvard University and Stanford University
• Has been working at Russian Corporation of Nanotechnologies since 2009, before that worked for Morgan Stanley
investment bank in London office , focusing on M&A in Financial Institutions sector
Kirill
Dushkin • MSc Management degree from Imperial College , London
• Graduated from Moscow State Institute of International Relations (BSc and MSc in Economics), where he founded the
MGIMO Business Club and was elected Chairman of the Student Research Association
• McKinsey engagement manager. Implemented projects on strategy and operational efficiency for major energy and
mining companies in Russia. Helped international companies to enter Russian market
Konstantin • Served as a trainee at Goldman Sachs bank, working in the area of financing fast growing companies in Russia
Kuzovkov
• Graduated from Harvard University (MBA) and Finance Academy under the Government of Russian Federation
• Has been working in World Bank for eight years. Lead public sector restructuring projects in Middle East and Central
Asia and coordinated projects on implementing the assessment of regular impact in Russia on federal and regional
Michail level
Pryadilnikov • Ph.D degree from Harvard in public administration (2009). Taught the theory of management in London School of
Economics
• Ex-CEO and a co-owner of a telecommunication company IP-Net. Achieved a 65-time growth of company revenues
and was among the first in the world to implement a new satellite telecom technology in telecom
Murad • Elected the President of Harvard Club alumni association (360 members in Russia)
Sofizade • MBA and MPA from Harvard University
• Belongs to 100 most respected Russian entrepreneurs (according to www.slon.ru)