Great potential and possibility of economic takeoff

I contend that the rampant crisis that shook the foundations of the Soviet economy and society from the mid-1970s onwards was the expression of the structural inability of statism and of the Soviet variant of industrialism to ensure the transition towards the information society.
M. Castells

India's apparent success in software exports has encouraged many developing countries to naively believe that they can follow the same path. But they cannot.
R. Mansell, U. Wehn

Armenia's "great potential" in developing Information and Communication Technologies (ICTs) is the main argument in the evaluations of the current situation and the predictions for the future. This potential is presented as the result of the Soviet legacy, which if employed properly will enable Armenia, like some other developing countries, to make visible progress in the international market in Information technology (IT) development and, in particular, in software export.

In this case, ITs act as an important factor "bridging" the Soviet past with the present. This unreserved reappraisal of a certain side of the Soviet legacy, which seems to be understandable in itself, contains in reality a paradoxical feature strictly characteristic of the present consciousness of the "transitional period". This potential (resources, ability, knowledge), as a rule, is not being defined, but permanently brought as evidence, is more and more being mythologized. Here, of course, its relation to the military-industrial establishment of the former powerful empire plays a certain role. In the Soviet era this field was completely closed, impenetrable to view from outside, and many details still remain secret.

Nevertheless, today hardly anyone will seriously deny the research, development and production capabilities of Soviet Armenia in the field of electronic computing machines (if we use the term of the time). I do not have such an intention either. However critical my approach, it is not at all repudiating. But along with accepting the capabilities of the past, I am inclined to consider as highly arguable the assessment of these capabilities in relation with the present day, and what is more - their conformity with the new conditions.

The up-to-dateness of this legacy is naturally becoming urgent in the first place because of the desire to solve pressing economic and social problems. The success of some developing countries in the ICT field becomes here a decisive impetus, and suggests the possibility of similar takeoff for Armenia as well. Thus, on the one hand is the undeniable legacy, and on the other hand, the captivating experience of the success of a number of countries, and as a corollary, the logical step to combine these two: the inherited capability is exactly what will help the achievement of dramatic economic progress. Hereinafter I will try to call into question this very logic, and to suggest more careful examination and comprehension of the potentialities inherited from the Soviet period, and to what extent they are able to serve Armenia today in entering the world market and the framework of European cooperation.

Information technologies in the Soviet Union

The first epigraph chosen for this article is an excerpt from the third volume ("End of Millennium") of the three-volume edition of M. Castells' famous research "The Information Age: Economy, Society and Culture". A voluminous chapter here is dedicated to the collapse of the Soviet Union, where one can find a deep analysis of the causes and effects of this historic event.

The industrial development of the Soviet Union from the technological point of view had not been in any emphatic way separated from the general course in the world, and until 1960 there were no serious reasons to talk about the economic lag of the Soviet Union in comparison with developed countries. In M. Castells' words, "something" happened in the mid-1970s that brought about technological stagnation in the Soviet Union. But this "something" happened not in the Soviet Union but in the advanced capitalist countries. This was the new technological revolution based upon information technologies, and the diffusion of these technologies in a wide range of applications in such a way that it became an extremely hard task for the Soviet system to make use of them and adjust them to their own interests. As a result, "By all accounts and indicators, the Soviet Union missed the revolution in information technologies that took shape in the world in the mid-1970s".

According to the results of expert research, by 1990 the advanced studies of the Novosibirsk branch of the Academy of Sciences of the Soviet Union lagged behind the American or Japanese computer industry. And the PC revolution completely bypassed Soviet technology.

Innovation that was associated with risk and unpredictability had a fundamental significance in this technological change. But the Soviet system discouraged innovation, producing technological stagnation while the rest of the world was going through a major paradigmatic transformation. The policy of controlling information was a serious obstacle to the renewal and dissemination of information technologies. And the very notion of a "personal computer" was objectively subversive to the Soviet bureaucracy, including the scientific bureaucracy. Thus, "as its very essence, Soviet statism denied itself the diffusion of information technologies in the social system. And, without this diffusion, information technologies could not develop beyond the specific, functional assignments received from the state, thus making impossible the process of spontaneous innovation by use and networked interaction which characterizes the information technology paradigm".

At the initial stage, starting with copying US technology, Japanese companies, and later on a number of Asian countries, achieved within one or two decades competitiveness with the American production, while the experience of the Soviet Union had an opposite result. And all of that in contrast to the enormous resources that Soviet Union was allocating to science, research and development; in contrast to the high level of education of the population and to the fact that the ratio of scientists and engineers to the employed population was much higher than in any other large country in the world.

According to Castells, it was not the state that was to blame for wrecking the transformation from the industrial to the information model, but the Soviet system: "Total control by the party over the state, and by the state over society via the twin levers of a centrally planned economy and of Marxist-Leninist ideology enforced by a tightly controlled cultural apparatus".

In conclusion, I would like to emphasize the fundamental break or difference between the Soviet time (and hence, the Soviet legacy and the corresponding perception of ITs) and the new situation, and after that also the carelessness of the approach that neglects this fundamental difference and easily transforms the capabilities of the Soviet period into the present situation. In this sense, ITs should be considered at once familiar and also new and unfamiliar. That is, the proper perception of the role and significance of ITs should be considered as a goal, a task and not as something inherited from the Soviet Union and comprehensible by itself.

From this point of view, the failure of the CIS member-states to create a common information zone - which was a result not only of political, economic and financial, causes, but especially of those conceptual causes inherited from the Soviet period - becomes absolutely understandable and instructive.

Different faces of the Soviet legacy

It is clear therefore that present day evaluations of Armenia's capabilities in IT development do not take into account the radical changes in the historical context. Moreover, they perceive the Soviet legacy as exclusively positive. Thus, technology as mere knowledge and skill, or simply a technical apparatus, is being easily taken out of a social and cultural context or emphasized ideological ascriptions. I think that it is incorrect to ascribe to a legacy purely positive significance, that the legacy in its entirety has two faces - ability and inability inseparable from each other. Disregarding this fact prevents us from describing and naming this "potential" - from the point of view dictated by new realities - and thus from finding out and evaluating both what we have and what we lack.

However, one can see with the naked eye that alongside the incomprehensible "potential", so far Armenia does not have experts and rudiments of knowledge related to various major domains of ICTs. Does not the lack of proper policy and development programs tell us about the lack of abilities and capabilities of fundamental importance?

So, they talk today in Armenia about IT development within the framework of the traditional model of the industry-society division, disregarding the social significance of new technologies and not comprehending the decisive role of the social factor in their development. The high level of education of the population of Armenia is referred to, but the fact that the educational system, in essence, has been left far behind the informatization process, and, thus, such education cannot be considered a substantial factor in ICT development, is neglected. And the government that has declared the IT industry to be a priority branch of the economy is out of touch with the modern information technologies of administration. Just as the schools in a country with "great potential" do not have informatics teachers and manuals, and the universities, naturally, do not have programs for training such teachers. And so on, and so on...

This attitude that, in essence, repudiates the societal nature of information technologies and deprives the idea of the information society of its true sense, has not moved far away from the Soviet ideology. It is this inability to realize the social significance of information technologies that, in my opinion, comprises the strictly undesirable side of the still-intact Soviet legacy.

Lessons of the Indian experience

Finally let us turn to the other side of the issue - the success stories of some developing countries. Among the first countries pointed out in such cases is India, which over the last decade has been steadily making progress in the field of software development and export. It is thus worth examining some details of the Indian experience. R. Mansell and U. Wehn in their book "Knowledge Societies: Information technology for Sustainable Development" discuss a number of, in their words, "myths" about ICT development. The first myth is that "developing countries are earning billions from software exports". By citing India as an example, they emphasize that the numbers mentioned are deceptive. For instance, if in India the export value in 1995-1996 amounted to about $750 million, then, afterwards, most of it (about two thirds) left the country by way of payments for miscellaneous expenditures related to the necessary work performed by numerous Indian specialists in the customer-countries, for marketing, for the import of equipment for local production, and other expenditures. Thus, there is an apparent exaggeration in the presentation of the export data and in the interpretation of the success of this branch of industry in developing countries.

Among the myths presented, the following is of interest for us: "Software exports drive domestic improvements". This assumption, as a rule, is also baseless, and more often the exact opposite happens, for local skills are transferred to export production. "Export pressures have thus diverted resources away from domestic-oriented production and have led these resources to create software that benefits companies based in the industrialized countries rather than addressing local needs. Far from assisting, exports are reinforcing weaknesses in the domestic market".

And here is the last myth: the Indian example is contagious for other developing countries that believe "India is exporting - so can we." India's success, if we avoid superficial interpretations, is based upon prerequisites of which the major part is lacking in the countries inspired by its experience. "Added to its inherent linguistic and size advantages, India has spent more than two decades developing the requisite skills, contacts, policies, and infrastructure that are so lacking in many other countries. As a result, it may continue to consolidate its position while squeezing out latecomers".

In continuation of the subject, I would like to supplement it with some other information and facts obtained from different sources.

As early as the mid-1970s, a National Center had been founded in India, with the aim of the continued modernization of the administrative system through computer technologies. It achieved momentum in the 1980s, when a network with satellite communication (NICNET) was established (today it is the largest network in the country). The network connects all the regional, state, and national centers, and maintains a large databases on social science, medicine and low, servicing, at the same time, all research institutions in the country. As R. Sumdaram states: "NICNET was not just about more computers in administration - it intended to change the very technics of power". In the end of the 1980s, the systems of electronic management were applied in all regional centers, which were connected to the capitals of the states, which in turn were connected to the national capital. Thereby, subsequently e-mail and other Internet services have become accessible through the National center… Since 1995, 6000 institutions have been interconnected, and an additional 8000 colleges are in the process of being brought into the second largest national network, ERNET.

The other side of these changes, which seems to not directly relate to the IT industry, in reality confirms the assumption that the IT industry and software export were not the only objects of concern for this country, and that much more deep-laid and continued social transformations lie at the base of the publicly discussed progress. Among the preconditions for India's success are the transformation of the management system and the government administrative structure, the merger of the systems of education and science into one powerful information and communication network, the creation and maintenance of a wide-content network of social significance extended all over the country...

Some of these circumstances directly concern Armenia. I have already alluded to the serious problems of administration systems. The other important subject is the understanding of the operative social significance of the information communication networks… And diverting domestic skills and resources, in the name of the development of the IT industry, toward export, and the neglect of local needs, is exactly what has been taking shape in Armenia over the last one or two years. As a result, the possibilities of the efficient dissemination of ICTs, and thereby, of true development of ICTs in the society and economy have greatly diminished.

To be continued.