USSR: ORGANIZATIONAL MEASURES FAIL TO SPUR TECHNOLOGICAL PROGRESS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89T01451R000500630001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 27, 2016
• Document Release Date: January 16, 2013
• Sequence Number: 1
• Publication Date: August 1, 1988
• Content Type: REPORT

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USSR: Organizational
Measures Fail To Spur
Technological Progress
A Research Paper
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Secret
SOV 88-10062
August 1988
Copy
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Scope Note
USSR: Organizational
Measures Fail To Spur
Technological Progress
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This paper assesses the performance of interbranch scientific and technical
complexes (MNTKs) in spurring and expediting the development and
introduction of critical technologies in the Soviet Union. It describes briefly
their organizational framework, how they operate, and what they are to 25X1
achieve. The paper does not discuss the actual status of targeted technol-
ogies or specific prospects for their development.
iii
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so V 88-10062
Au gust 1988
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Summary
Information available
as of] July 1988
was used in this report.
USSR: Organizational
Measures Fail To Spur
Technological Progress
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In December 1985 the Politburo mandated the creation of a new organiza-
tional mechanism, the interbranch scientific and technical complex
(MNTK), to spearhead the development of critical technologies for the
industrial modernization program. Each complex was to link, under the
overarching authority of a lead scientific institute, facilities that span the
entire product development spectrum. The MNTKs were designed to
bridge the gap between science and production to ensure that no new
scientific discovery would fall through the bureaucratic cracks?a phenom-
enon that traditionally has impeded innovation within the Soviet Union.
Similarly, the regime expected that the complexes?by exercising consider-
able authority over the production ministries?would both speed the
development of new technologies and foster broader diffusion of new
production processes
The regime's strategy for accelerating product development is a conserva-
tive, top-down approach based on time-honed methods used to advance
weapon technologies. The strategy has three elements: high-level party
support; strong, centralized planning; and priority access to resources.
Disappointing Results
The complexes, now numbering over 20, are performing dismally. In
general, they have not been successful either in increasing the volume and
quality of new products or in shortening the research and development
(R&D) process. In particular, the complexes have not met their time
schedules for the development of new products and processes, and the
regime has reproached them for spending too much time just getting
organized. In fact, many of the MNTKs have not developed any new
prototypes, and the leadership has complained that some of the complexes
"exist on paper only" or are only in "embryonic form." Similarly, the
results that they have been able to produce have not met the regime's
quality standards
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Placing the Blame: What's Wrong?
The MNTKs have encountered significant obstacles and resistance. Their
efforts have been hampered most by their inability to obtain preferential
status for resources. The MNTKs' inability to claim priority status points
to a flaw in the strategy itself. The breadth and scope of the MNTK
activities, especially when coupled with efforts outside the complexes to
develop new technologies, are probably stretching resources too thin and
generating competing claims for resources.
Much of the fingerpointing has been directed at the industrial ministries
that were to participate in the complexes. The party and the MNTK heads
have repeatedly complained that the ministries have either dragged their
feet or refused to cooperate altogether.
Although the regime has patterned the MNTK after the model used by the
defense industries for development and production, it did not duplicate the
role of the defense customer?the Ministry of Defense. The military's
precisely defined needs and demands for advanced technology to counter
Western threats, coupled with its rigid quality control measures, has
fostered technological advance within the defense industries. The MNTKs
are also attempting to develop sophisticated technologies, but they have
only limited ties to potential consumers. As a result, even when able to de-
velop new prototypes, MNTKs usually are not able to find customers for
their products and, therefore, are unable to convince series production
plants to produce the new products
The dismal results of the MNTKs are largely due to the regime's focus on
attacking the bureaucratic?rather than systemic?barriers to innovation.
Although the MNTK heads have pointed to systemic barriers?the lack of
incentives for enterprises to produce new technology and the aversion of
producers to the risk associated with new products?as primary obstacles,
the leadership, thus far, has done little to overcome these barriers. The
regime probably thought that, by adopting the methods used by the defense
industries to develop technologies, it could duplicate the latter's success
without drastically disrupting the system.
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Looking for Help
The regime is tapping the defense industries to support the MNTKs. Most
of the technologies targeted by the MNTKs have civil and military
applications, and many of the complexes include organizations that are
either directly subordinate to the defense industrial ministries or conduct
R&D for them under contract. Further, many of the technologies targeted
for attention by the complexes have been most fully developed within the
defense industries. Moscow probably intended the MNTKs to serve as
conduits for technology transfer between the two sectors, and the inclusion
of defense industrial organizations within the MNTKs was probably
designed to encourage broad diffusion of the MNTKs' achievements.
Reactions to the regime's solicitations for increased support have been 25X1
mixed. A recent call by a defense industrial deputy minister to form an
MNTK on composites indicates that at least some in the defense sector
support the MNTK concept as a way to accelerate developments of special
interest to defense. On the other hand, the head of the Personal Computers
MNTK complained that ministries responsible for producing the comput-
ers?of which three are defense industrial?were resisting because they
viewed the MNTKs as a "temporary campaign." 25X1
Since mid-1987 the regime has also turned increasingly toward the West to
gain assistance for the MNTKs through cooperation agreements with
foreign governments and businesses, joint ventures, and instrument pur-
chases. We believe that the original MNTK blueprint had only a very
narrow role for the West, with the primary emphasis on the USSR's
indigenous R&D capabilities and an avoidance of dependence on Western
assistance. Nonetheless, the Soviets have shown an eagerness to broaden
Western contacts, especially as a way to overcome the barriers to R&D re-
sulting from a deficient experimental test base. We believe their efforts to
enlist Western assistance will intensify over the next year as the complexes
become more desperate to meet 12th Five-Year Plan (1986-90) goals
Prospects
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In the near term, the performance of the MNTKs is likely to fall far short
of the objectives set for them. The impediments to progress are major and
will not be easily or quickly overcome. Shortages of trained personnel,
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deficient experimental test bases, bureaucratic resistance, and systemic
deficiencies will weaken the impact of the MNTKs throughout the
remainder of the present plan period.
Over the long haul, the MNTKs' ability to serve as a mechanism to
advance key technologies rapidly will hinge on the regime's ability to
resolve bureaucratic resistance, command priority status for the MNTKs,
and refine the strategy to address the problems caused by the "absent
customer." While Gorbachev has demonstrated his determination to
address bureaucratic resistance, he has not succeeded in overcoming it. His
prospects for success in other areas are similarly limited. MNTKs,
however, may provide important benefits to the defense sector, which is
likely to continue to claim a high priority on S&T resources and which has
a powerful and knowledgeable customer in the military. The MNTKs may
be particularly useful in transferring Western technology to the defense
sector.
Even in the unlikely event that these barriers are overcome and the
MNTKs are ultimately able to operate as designed, we do not believe that
they will be competitive with Western S&T in spurring broad-based
technological advancement throughout the economy. The MNTKs' top-
down, command approach to innovation relies on targeting specific areas
for forced development, thus limiting spontaneity and flexibility. This
approach orients the Soviet Union toward a "follower" or "catchup" role.
Beyond the MNTK
The Soviet leadership is becoming increasingly aware of the flaws in the
MNTK strategy and is rethinking the role and structure of these organiza-
tions. It has begun to question whether the MNTK mechanism is
appropriate as a catalyst for technological progress and whether it should
be continued. Reforms now being considered could eventually result in a
shift away from the MNTKs. Moscow is taking its first faltering steps to
address the systemic features of Soviet R&D. Recent legislation aims at
creating conditions and incentives for greater "technology pull" from below
and expanding the autonomy of research and production collectives
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Over the next few years the regime is likely to pursue both approaches?at-
tempting to integrate centralized with decentralized methods. However,
some of the new, decentralizing measures now being introduced?such as
self-financing and increased competition between R&D organizations?are
incompatible with the centralized strategy embodied in the MNTKs. Thus,
although a shift toward a greater reliance on decentralized decisions on
new products and processes is probably correct over the long term, in the
short and medium term it creates the potential for conflict and disruption
in Soviet technological development and could ultimately cause the
leadership to abandon the MNTKs.
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Contents
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Scope Note
iii
Summary
Introduction
1
What the Regime Expects To Achieve Through the MNTKs
1
Accelerate and Improve Returns From Investments in Science
3
Facilitate Interaction With the Defense Industrial Sector
4
The MNTK Strategy
4
Borrowing From Defense Industry
4
Party Support
5
Strong Centralized Planning and Oversight
5
Priority Access
5
What and How Are the MNTKs Doing?
6
Some Successes
6
Many Disappointments
6
Placing the Blame: What's Wrong?
8
Fingerpointing
8
Need for Greater Autonomy
9
Priority Status Only Illusory
9
Systemic Factors
10
Linking Research to Production: The Gap Remains
11
Emulating the Defense Industrial Sector:
The Missing Link
11
Regime Response
13
Tightening the Screws Through Reorganizations
13
Looking Outward
14
Scaling Back Expectations
16
Having Second Thoughts: Moving Beyond the MNTK
16
Organizational Fixes
17
Systemic Adjustments
17
Prospects for Success
19
Falling Short for the Near Term
19
Developing New Technologies
19
Shortening the R&D Process
19
Strengthening Exchange Between Civilian and
Defense Sectors
19
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Long-Term Prospects
20
Overcoming Bureaucratic Resistance
20
Staking Claim to Priority Status
20
Refining the Model
20
Implications for the West
21
Appendix
MNTK Goals and Results
23
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USSR: Organizational
Measures Fail To Spur
Technological Progress
Introduction
Gorbachev is holding the scientific community re-
sponsible for the rapid introduction of new production
technologies into industry. In a December 1985 de-
cree, the Politburo and Council of Ministers unveiled
the organizational mechanism that is intended to play
the pivotal role in this technology development effort:
the interbranch scientific and technical (S&T) com-
plex (MNTK). The complexes are designed to over-
come what has traditionally been a major weakness
within the Soviet S&T and industrial sectors: the
disconnect between science and production. Each
MNTK is to link, under the overarching authority of
a lead institute, facilities that span the entire product
development spectrum: from basic research to at least
prototype production and?in some cases?series pro-
duction.
What the Regime Expects To Achieve Through the
MNTKs
It has become a matter of urgency to create organiza-
tional forms of integrating science, technology, and
production, which will make it possible to ensure that
scientific ideas are followed up precisely and prompt-
ly frorn their beginning right through to their exten-
sive practical application. We are convinced that
interbranch scientific and technical complexes must
become one of these forms.
Lev Nikolayevich Zaykov,
Party Secretary and Politburo
Member
March 1987
The Soviet leadership understands clearly that the key
to long-lasting improvement of the country's economic
situation is the continuous, rapid introduction of
advanced production processes to produce high-quali-
ty goods using successive generations of increasingly
productive machinery and equipment. The Gorbachev
regime expects MNTKs to develop specific technol-
ogies critical for modernization and to shorten the
1
Table 1
Goals for Increased Use of Advanced
Technology in the 12th Five-Year Plan
Percent
1988
1986-90
Robots
NA
190
Industrial lasers
20
150-210
Powder metallurgy
20
NA
Composites
20
1,000-1,200
Membrane
20
150-200
Rotary automated lines
110 b
6,300 c
Personal computers
140 b
1.1 million
o The 12th Five-Year Plan calls for the use of these technologies to
expand by the totals indicated.
b The goals for rotary automated lines and personal computers refer
to increases in production rather than increased use.
The goal for rotary automated lines and personal computers
represents the planned production in units.
time required to move from the laboratory to the shop
floor. The regime also expects MNTKs to improve the
efficiency of the research and development (R&D)
process?that is, to ensure greater return from R&D
spending. Finally, the MNTKs are intended to tap the
defense-industrial sector for technology needed for
civilian modernization and to create a reverse technol-
ogy flow back into the defense sector
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The regime has targeted for priority development the 25X1
same advanced, high-technology areas that are criti-
cal to Western modernization?automation, comput-
ers, new materials, bioengineering, and energy. By
1991 the use of key technologies is to expand by "150
to 200" percent over that of 1986. The complexes are
to ensure that the new technologies are developed and
meet the regime's specifications for numbers of new
products and standards of quality (see table 1). Ac-
cording to Soviet public statements, there are now 23
MNTKs focused on the targeted technologies listed in
table 2.
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Table 2
MNTKs and Their Targeted Technologies a
Automation Computers New Materials Bioengineering Energy
MNTK
Welding
Sb
Rotor
Personal Computers
Fiber Optics
Industrial Lasers
Machine Reliability
Biogen
Catalysis
Robot
Membranes
Oil Extraction
Metallurgy Machinery
Powder Metallurgy
Mechanical Processing
Thermal Synthesis
Anticorrosion
Geological Prospecting
Textile
"Radiotekhnomash"
Energy Conservation
Other technologies:
Eye Microsurgery
Scientific Instruments
22 MNTKs have been identified.
b P is principal focus.
S is secondary focus.
Note: MNTKs have been proposed, but formation has never been
confirmed, in the following areas: composites, radiation hardening,
micro-optics, computer-aided automation, and pulsed machinery.
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Accelerate and Improve Returns From
Investments in Science
The Soviet R&D base, although mammoth in size, is
grossly inefficient (see inset);
the rate of return on R&D has
actually diminished since the late 1970s. One of the
principal causes driving down the return on the
regime's R&D expenditures is that very few scientific
achievements are translated into actual applications
or introduced into production. Many of the innova-
tions developed by an institute are not picked up by
design bureaus for use in new prototypes and are left
to languish within an institute until obsolete and
forgotten, or until discovered in the West and later
reimported into the Soviet Union. According to offi-
cial statistics, only one-third of Soviet inventions and
discoveries are introduced into production, and only
15 percent of inventions are introduced into more than
two enterprises. An even more dismal appraisal was
given in a March 1987 Izvestiya article. According to
an official from the State Committee for Inventions
and Discoveries, only 10 percent of inventions ever
find practical use, and only 3 percent of all inventions
are introduced at more than one enterprise.
Similarly, Soviets writing in the open press complain
that the country cannot expect to be competitive with
the West as long as it takes seven to 15 years to
transform an idea into a usable and marketable
product. The regime has called for a "drastic" reduc-
tion in the duration of the process?in one instance,
specifying 3.5 to five years as a goal. (Competition to
trim the product development cycle is currently in-
tense in the West. For example, the automotive
industry is seeking to pare the process to 3.5 years
The regime expects that the MNTKs will be able to
overcome the bureaucratic obstacles as well as appre-
ciably improve communications within the R&D pro-
cess. The MNTKs are to speed and improve technol-
ogy development and problem resolution by bringing
scientists and designers under one roof. Closer and
improved communications should result because each
3
Bureaucratic Boundaries to Innovation
Yevgeniy Velikhov, Academy of Sciences Vice Pm?si- 25X1
dent and scientific adviser to General Secretary Gor- 25)0
bachev, has pointed out that: "The branch scientific
institute became a barrier to the spread of certain
scientific ideas that appeared in the Academy and the
higher and specialized educational institutions."
In the Soviet Union, the different major stages of 25X1
R&D?basic and applied research, prototype design,
and testing?tend to be performed by different orga-
nizations with widely varying subordination. Soviet
R&D facilities come under three broad organization-
al categories: the industrial ministries (referred to as
sectorial or branch science), Ministry of Higher and
Secondary Specialized Education (Vuzy), and the
academies of sciences. Communications run primari-
ly along vertical lines, with the individual actors
reporting directly to central, superior administrative
offices within the parent ministries in Moscow. The
bureaucratic boundaries have acted as barriers that
limit the development of new technologies and pro- 25X1
cesses. 2bX1
While the bureaucratic boundaries have created gaps
within the scientific sector, they are also responsible
for the gulf that separates this sector from produc-
tion. The two sectors report to different superior
organs?even within the same ministry. They also
operate under different regulations and procedures
for planning, financing, and incentives. What is an
incentive to one sector can be a disincentive to the
other. For example, plan fulfillment at a research
institute has been based on project completion, not 25X1
whether the results are suitable for introduction at
the production enterprise. Consequently, new proto-
types leaving the institute are frequently inadequately
tested or have design flaws that prevent their series
production. 25X1
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MNTK will be able to link the various actors, permit
at least some simultaneous research activity, and
reduce the time required to develop the extensive
documentation.
The MNTKs are expected to sharply increase the
return on investment in science. Although to our
knowledge no specific goal has been set for the
MNTKs, the regime has cited the excellent returns
achieved by the Paton Electro-Welding Institute and
the Problems of Material Science Institute. Because
each complex is to link the numerous participants
within the R&D process, the MNTK is intended to
ensure that no new scientific discovery is allowed to
fall through the bureaucratic cracks. Similarly, the
regime expects that the complexes, exercising their
linkages and authority with the relevant ministries,
will achieve broader and more thorough diffusion of
new products and processes.
Facilitate Interaction With the Defense
Industrial Sector
Most of the technologies targeted by the MNTKs
have applications in both the defense and civilian
industrial sectors, and we believe that the MNTKs
are to serve as conduits for technology transfer be-
tween the two sectors. Although the regime has not
explicitly cited such a role, the organizational network
of many of the complexes shows substantial ties to the
defense sector. Further, many of the technologies
targeted for attention by the complexes?such as
personal computers, robots, fiber optics, and testing
equipment?have been most fully developed within
the defense industries. For example:
? The lead organization of the Rotor MNTK is
subordinate to the Ministry of Defense Industry.
? The MNTKs for Personal Computers, Robots, In-
dustrial Lasers, Fiber Optics, and Machine Reli-
ability incorporate research or production facilities
that are subordinate to the defense industrial
ministries.
? At least half of the MNTKs?although subordinate
to civilian ministries or the Academy of Sciences?
include research institutes in which a sizable share
of research is conducted under military contracts.
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Moreover, although the Soviets have announced that
over 500 organizations are working within the
MNTKs, they have identified fewer than 100 facili-
ties. We assume that many of the 400 unidentified
organizations are tied to the defense sector
The MNTK Strategy
The MNTK mechanism is a typical Soviet top-down
strategy. In fact, it uses the approach prevailing in the
defense sector, which features three elements:
? High-level party support to overcome bureaucratic
resistance.
? Strong, centralized planning and oversight to estab-
lish and meet goals on time.
? Preferential status and priority access to resources
to avoid disruptions.
Borrowing From the Defense Industry
This strategy?which pushes technology from
above?borrows heavily from the approach used with-
in the defense sector to develop critical technologies
for weapon programs. It emphasizes reliance on the
USSR's indigenous R&D capabilities and an avoid-
ance of dependence on Western assistance or inputs.
Indeed, according to statements made by the leader-
ship, the intent is to have the MNTKs apply, within
the civilian R&D sector, those tactics that have been
relatively successful for the military. In his June 1985
speech dedicated to S&T issues, Gorbachev outlined
his plan for the formation of new organizations?units
that eventually became the MNTKs?that would be
responsible for developing critical technologies by
emulating the methods used in R&D and carried out
under the auspices of the defense industries. Gorba-
chev reemphasized, while visiting the Baykonur Space
Center in May 1987 and praising Soviet achievements
in space and rocket development, his expectations that
the country's R&D community could duplicate these
same successes without going "cap in hand abroad."
Similarly, Academy Vice President Konstantin Frolov
emphasized in a Soviet publication that the idea of the
complexes and their formation was based on the
experiences of the military-controlled space and nu-
clear programs. The regime probably believes that the
successes achieved in these programs can be duplicat-
ed by the MNTKs by transplanting the management
processes and tactics used in military R&D.
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Earlier efforts to transfer defense-sector practices to
the civilian side have not proved to be successful,
however. During the late 1960s and early 1970s,
scientific production associations (NPOs) were formed
and employed many of the same measures. The
NPOs, like the MNTKs, were an organizational
mechanism designed to link the key actors in the
R&D and production process. The NPOs did not
provide the anticipated results?the accelerated de-
velopment of new technologies?although about 500
of them were still in existence in 1987. Generally, the
NPOs were defeated by many of the obstacles now
confronting the MNTKs?supply problems, a defi-
cient experimental base, and fragmented authority.
Moreover, the NPOs suffered from an identity crisis.
While on the one hand they were tasked with rapidly
developing new technologies, on the other hand the
parent ministries and enterprises looked to the NPOs
for support in meeting current production quotas.
Many of the NPOs eventually became prisoner to
narrower, parochial interests at the enterprises, to the
neglect of scientific research and technology develop-
ment.
Gorbachev's science planners most certainly analyzed
the experience of the NPOs to find ways of avoiding
the problems they encountered. From Moscow's per-
spective, the strategy of an overarching authority was
itself sound, but the organizational implementation
was too narrow. NPOs rarely?if ever?crossed min-
isterial boundaries. The steps that the leadership took
to refine the strategy focused primarily on organiza-
tional adjustments. The scope was broadened to
link?regardless of ministerial subordination?facili-
ties to the capabilities necessary for the development
of a specific, interdisciplinary technology. In contrast
to the NPOs, the MNTKs include basic research
institutes under the Academy of Sciences and facili-
ties drawn from numerous ministries. Similarly, the
MNTKs have been delegated greater decisionmaking
authority.
Party Support
The party has frequently demonstrated its support for
the MNTK concept. The leadership has coupled
visible support with public criticism in an attempt to
overwhelm Nireaucratic resistance from ministries
and overcome the inertia and stagnation within the
5
R&D sector. Gorbachev, in his speech to the January
1987 Central Committee plenum, expressed "great
hopes" for the MNTKs and called upon the ministries
to provide the complexes with all the assistance they
needed and to facilitate their work in every way.
"Second Secretary" Yegor Ligachev and party secre-
tary Lev Zaykov have both praised the MNTK
concept. Zaykov, when responsible for both the civil-
ian and military industrial sectors, attended organiza-
tional meetings at some of the complexes to relay
party support, but also displeasure at the obstacles the
MNTKs have encountered. Ligachev, who we believe
has had general oversight responsibility for science
and education, warned: "The directors of the MNTKs
and the leaders of ministries, agencies, and the Acad-
emy of Sciences . . . are personally responsible for
effective utilization of this new-in-principle form of
integrating science with production."
Strong Centralized Planning and Oversight 25X1
Each complex has theoretically been given responsi-
bility for almost all aspects of developing its target
technology, including forecasting future areas of re- 25X1
search and developing comprehensive S&T pro-
grams?the principal tool used to plan Soviet R&D
activity in key areas. The planning authority of the
MNTK goes beyond the complex itself and includes
all R&D facilities working on the technology.
MNTKs are responsible for developing annual and
five-year plans covering the activities of all these
organizations. The complexes, working in conjunction
with the Council of Ministers, are authorized to draw
in additional participants?by compulsion, if neces-
sary?to fulfill their mission. The MNTKs are to
draw on the State Committee for Science and Tech-
nology for administrative support as well as leverage
when coordinating across ministerial lines. They also
are responsible for advising the State Planning Com-
mittee (Gosplan) on how and where their achieve-
ments are to enter series production. Gosplan, in turn,
is to incorporate these results into the plans of produc- 25X1
tion enterprises. 25X1
Priority Access
The MNTKs have?in theory?also been given prior-
ity status when requisitioning resources. This right,
rarely bestowed outside the defense industry sector, is
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intended to avoid the bottlenecks that could retard the
MNTKs' activities and progress. Besides materiel, the
complexes are to have priority access to manpower
and funds. The State Committee for Science and
Technology (GKNT) is to maintain a special ruble
reserve for disbursal to the MNTKs when necessary.
Similarly, MNTK construction requirements are to
be fulfilled expeditiously
What and How Are the MNTKs Doing?
Great hopes for the acceleration of the elaboration of
new scientific ideas and especially for the large-scale
introduction of newly efficient generations of equip-
ment were connected with the establishment of inter-
branch scientific technical complexes. A little less
than two years have passed [since their formation'. It
has to be admitted that the hopes for new complexes
did not entirely justify themselves.
Ekonomicheskaya gazeta
October 1987
The MNTKs are not meeting Moscow's expectations.
There have been some successes, but these have been
limited. Generally, the complexes have not succeeded
in improving the volume and quality of new products,
or in shortening the R&D process. They have encoun-
tered problems in getting themselves organized and
operational. Indeed, the regime, according to recent
open-source articles, is rethinking whether the
MNTK mechanism can fulfill the leadership's objec-
tives.
Some Successes
Over the past year the Soviet press has reported that
some of the MNTKs are operating successfully. These
claims, however, have been made by those complexes
that were already successful organizations before they
became MNTKs. Indeed, the regime, in a general
appraisal of the MNTKs, acknowledged that the few
successes could not be attributed to the MNTK
strategy, but rather reflected their prior effectiveness.
These "superstars" include only Paton Welding, Ro-
tor, and Eye Microsurgery (see inset). Much of their
success is a reflection of the capabilities of the MNTK
general directors?B. Ye Paton, L. N. Koshkin, and S.
N. Federov, respectively. For example, Paton and
Secret
Koshkin both have a reputation for innovation and
dedication to finding applications for their products.
All three have high-level party contacts. (Federov is
Gorbachev's personal eye doctor, and?according to a
Soviet journal?former Minister of Defense Ustinov
took a strong personal interest in Koshkin and his
rotary technology and was instrumental in its diffu-
sion throughout the economy.)
The few achievements that have been identified tend
to be single products and not new technological
processes. For example, MNTK Biogen is supposed to
have developed "more than 120 different items, in-
cluding unique preparations and chemical reagents,"
but MNTK Membrane developed a paint recovery
method, and MNTK Machine Reliability designed a
test bench for a robot production facility.
Many Disappointments
With the exception of the examples noted above and
in the appendix, however, few of the complexes can
point to any achievements. Rather, the MNTKs have
been rebuked strongly because they are "conducting
their work unsatisfactorily. ... and many of them had
failed to embark on the creation and introduction of a
new generation of equipment and technology." Presi-
dent of the Academy of Sciences Guriy Marchuk
complained in October 1987, for example, that the
complexes "still have not become the structural units
that are capable of substantially accelerating the
development and introduction of new technologies."
Although our ability to assess the performance of the
individual MNTKs is limited because we do not know
all of their goals, nor the peformance of each, regime
criticism indicates that the MNTKs have fallen short
in several areas:
? Timeliness. According to the State Committee of
Statistics' official report on 1987 plan fulfillment,
the MNTKs have not met their time schedules for
the development of new equipment and technol-
ogies. The regime has criticized the complexes for
spending too much time just getting organized. For
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Superstars: Thumbnail Sketches
Paton Welding MNTK
The Paton Welding complex was formed on the basis
of the Ukrainian Academy of Sciences' Ye. 0. Paton
Electric Welding Institute, reportedly the largest
S&T complex in the USSR. Paton's institute, which
has its own massive experimental test base, six
engineering centers, and pilot production facilities, is
unique within the Academy system for having very
successfully linked basic to applied research and for
having developed extensive ties to industrial facili-
ties. The institute has long been praised as a model
for others to emulate. In his June 1985 speech laying
out his S&T strategy, Gorbachev pointed to the
Paton Institute as the prototype for new organization-
al structures?later named interbranch scient1fic and
technical complexes?that were to spearhead tech-
nology development. The Paton Institute, now the
MNTK, is a world leader in the develoment of
welding and electrometallurgy techniques.
at least 80 percent of its work is done
under contract for the military.
MNTK Rotor
MNTK Rotor is led by the Podolsk Design Bureau
(KB)?generally called the Kosh kin Design Bureau
after its general director?and is subordinate to the
Ministry of Defense Industry. Rotary technology has
been the creation of, and under the total domination
of Lev Kosh kin, who originally developed the tech-
nology during World War II for the production and
handling of ammunition and who has pushed hard for
its wider use in the economy. At its present state of
development within the Soviet Union, it is generally
"low tech" in nature. In its simplest forms, rotary
technology consists of a variety of machine tools
arranged around a large cylinder (hence the name
"rotor" or wheel) that perform a series of operations
on unfinished goods transported by conveyer belts. Its
use has been suggested in many instances in place of
robot technology; indeed, there appears to have been
a long, competitive battle between the two technol-
ogies in the USSR. While rotary technology can be
upgraded to "high tech" through the incorporation of
sophisticated automated numerically controlled
units, this has occurred only slowly?if at all?in the
USSR. Kosh kin is currently taking a very active role 25x1
in adapting the technology for widespread use within
the food-processing industry as part of the regime's 25X1
overall effort to tap the defense industries for support
in the agricultural sector.
MNTK Eye Microsurgery 25X1
This complex for eye microsurgery is unique in that
it offers a service rather than a product. Its director,
S. N. Fedorov, has essentially "automated" eye
surgery. The surgical process incorporates practices
common to assembly line work. An operation is
conducted by a series of special teams, each perform-
ing its own function in turn. Fedorov claims that the
process has led to a higher cure rate, increased
"productivity," and lower patient costs.
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example, MNTK Catalysis, even though it had new
developments "on the shelf" when first created, was
still slow to show any results. Similarly, MNTK
Membrane wars accused of lack of progress and
"living off the scientific reserves" that it inherited.
? Number of prototypes. The complexes have not met
the regime's expectations for numbers of new proto-
types or products. On the basis of criticisms in the
Soviet press, we believe that, as of mid-1987, at a
7
minimum the Membrane, Personal Computers,
Powder Metallurgy, Robot, Industrial Lasers, and
Fiber Optics MNTKs were not meeting the objec-
tives assigned to them within the one- and five-year
plans. (We have no information on several MNTKs,
although we assume that some of them also are
falling short.) Many of the MNTKs have not devel-
oped any new prototypes. The leadership has com-
plained that many of the complexes "exist on paper
only" or are in "embryonic form."
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? Quality of results. The MNTKs' R&D efforts, as
well as their results, have not met the regime's
quality standards. In 1987 MNTKs Personal Com-
puters and Robot had to rewrite their plans because
many of the projected activities would not have met
world standards. Metal powders produced by the
Powder Metallurgy MNTK were "unstable." The
new laser developed by MNTK Industrial Laser
was, according to the Soviet press, considerably
inferior to foreign models. And even the "superstar"
MNTKs have had problems: as of February 1987,
Rotor was "not peforming to its full potential," and
Paton himself complained that internal problems
kept results of the Welding MNTK from going
beyond "average quality."
The leadership appears impatient for the MNTKs to
become fully operational and is intolerant of their
shortcomings. The MNTKs have been in existence
only about two years, yet the regime's criticism of
their performance is particularly harsh. The leader-
ship's unyielding?almost desperate?attitude re-
flects the critical role that the MTNKs and the
technologies they are to produce are supposed to play
in the industrial modernization effort. The regime is
therefore hoping the MNTKs will produce quick
results. Its attitude parallels the criticism levied
against the machine tool ministry in the machine-
building sector, which was also supposed to lead the
way in producing new advanced equipment. The
regime is banking on the MNTKs to have the new
technologies in place for the start of the 13th Five-
Year Plan (1991-95)
Placing the Blame: What's Wrong?
The initial reaction of those responsible for MNTKs'
lackluster performance has been to place the blame
elsewhere. It appears, however, that the mechanism's
failure stems more from systemic factors and, despite
leadership promises, low priority in obtaining supplies.
Fingerpointing
The principal participants in the complexes?the par-
ty, ministries, and MNTKs?are taking advantage of
the regime's policy of glasnost (openness) to place or
shift the blame for the MNTKs' dismal results
Secret
The regime has complained that MNTK directors,
and the Academy of Sciences in general, have not
been sufficiently diligent in eliminating obstacles. For
example, MNTK Oil Extraction's slow progress was
attributed to its weak and ineffective director. In
another case, in December 1987 the director of one of
MNTK Machine Reliability's principal organiza-
tions?O. A. Kaybyshev of the Superplasticity Insti-
tute?was censured for allowing the performance of
his organization to worsen. The resignation in October
1986 of Academy President A. P. Aleksandrov may
have been pushed, in part, by the regime because of
his lack of wholehearted support for the MNTKs (see
inset). When announcing his resignation at the Octo-
ber Academy meeting, Aleksandrov admitted that he
had not been able to give the complexes his full
attention. (It was at this meeting that Ligachev issued
his strong warning that Academy and ministry offi-
cials would be held responsible for their support of the
MNTKs.)
Most of the fingerpointing, however, has been direct-
ed at the ministries, which were to participate in the
complexes through the inclusion of their scientific
institutes, design bureaus, and experimental test facil-
ities. The party and the MNTK heads have persistent-
ly publicized their grievances with the ministries,
complaining that they have either dragged their
feet?hence slowing the formation of the MNTKs?
or have refused to cooperate altogether and have
reneged on their commitments. For example:
? The director of MNTK Robot emphasized that he
could "only influence with words" his many unwill-
ing ministry partners.
? G. A. Abil'sitov, head of MNTK Industrial Lasers,
declared that the ministerial organizations that
belonged to his MNTK did so in name only, not in
action. The complex's activities were "more and
more taking on the character of bureaucratic
warfare."
? Academician Koshkin, director of the top-perform-
ing MNTK Rotor, griped that many ministries were
not cooperating or paying attention to his MNTK.
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A Hesitant Academy
Both the members and leadership of the Academy of
Sciences have not been strong advocates of the new
complexes. Academicians warn that applied research
and product development are not in the Academy's
interest because they detract from its primary focus
on basic research. Some of the Academy's top scien-
tists have complained openly that the MNTKs would
be a serious strain on the Academy's already limited
resources. World famous theoretical physicist V. L.
Ginzburg argued in the Academy's official journal
that it was "inadmissible to carry out the strengthen-
ing of the contacts of science with production at the
expense" of the Academy's responsibility for pursuing
basic science. Ginzburg, contending that the Academy
budget was already too small (4 percent of the state's
expenditures on science), warned that, for "the Acad-
emy to be responsible for everything . . . means not be
responsible for anything." Similarly, V. A. Trapezni-
kov?noted Soviet computer specialist, head of an
institute participating in the MNTKs, and a strong
advocate of the reform and revitalization of Soviet
science?complained in a January 1987 Pravda arti-
cle that the once top-performing institutes were be-
coming "overtaxed, bogged down in administrative
work, and turning into bureaucratic apparatuses" as
a result of their role in leading the large amalgam-
ations.
Complaints leveled by Boris Naumov, director of the
Personal Computers MNTK until his death in June
1988, indicate that?at least in his case?the defense
industries have also been uncooperative. Naumov
contended that, although he had attempted to assert
control over the organizations involved in the develop-
ment and production of personal computers, the four
ministries responsible for producing the computers?
of which three are defense industrial?were resisting
because they viewed the MNTKs as a "temporary
campaign."
Need for Greater Autonomy
The record so far suggests that the complexes do need
greater autonomy from the overbearing control of the
ministries and greater authority to enforce the rights
9
granted to them by the regime. Ministerial conserva-
tism makes it difficult to exercise the powers the
MNTKs possess on paper. The MNTKs' inability to
assert control over the ministries and to assume true
leadership over the development of the targeted tech-
nologies is a result of a loophole in the regulations
governing their activities. Although the lead institute
for each MNTK is to have authority over all the
participating organizations, each subunit retains its
status as an independent legal entity and its subordi-
nation to its parent ministry. Each MNTK subunit
continues to be responsible to its parent ministry for
the fulfillment of its previous tasks and responsibil-
ities. The MNTK subunits have, in essence, become
dually subordinate organizations and are required to
comply with the tasking of two masters who are
levying competing, often conflicting, demands on the
S&T organizations.
Priority Status Only Illusory
Almost all of the MNTK directors have protested that
they have not been given enough support. Although
the MNTKs, by decree, were ensured priority access
to resources, this has not materialized. MNTK heads
often have stressed that no real progress can be made
until "priority status" is a reality and not merely an
illusion or rhetoric. They point to severe shortages
that are hindering the full spectrum of MNTK
activity:
? Scientific instruments and experimental test base.
The lack of adequate experimental test facilities
equipped with state-of-the-art precision scientific
instruments is, by far, the most critical shortage
confronting the MNTKs. At least 11 complexes
have made known their need for design, experimen-
tal test, and prototype production facilities. Direc-
tors have charged that deficient or nonexistent test
facilities are severely retarding?or blocking alto-
gether?progress by the MNTKs. The head of
MNTK Biogen stated that the lack of testing
capability was impeding his ability to move new
products into series production until the period 1995
to 2000. The head of MNTK Industrial Lasers
protested that his organization was "in desperate
need for priority placement on construction lists,"
but his pleas for preferential consideration were
ignored.
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? Financial support. Abel Aganbegyan, one of Gorba-
chev's economic advisers, has pointed to the contin-
ued practice of financing science separately from
production as a major handicap. MNTKs Biogen,
Catalysis, Machine Reliability, and Oil Extraction
have stated that financial problems are hurting their
activities. The Oil Extraction complex lacked any
funding for its first full year. The complexes have
called for funding methods to be reformed and for
increased financial autonomy.
? Specialists. Most of the complexes have complained
about a serious shortage of technically qualified
specialists, especially designers. For example,
MNTK Rotor alone needs 30,000 to 40,000 design-
ers over the next five years. Instruction in some of
the specialties within the higher educational facili-
ties is, according to the complex heads, either
deficient or nonexistent. MNTK Robot's director
contended that there was such a demand for robot
specialists he could not hold on to them; organiza-
tions able to pay higher salaries were drawing them
away. Beyond the need for S&T workers, there was
a shortage of trained personnel to install, operate,
and service the new technologies produced by the
MNTKs.
? Supplies. The complexes, which have not been
granted priority access to general supplies, raw
materials, or specialized subcomponents, have called
for reforming the MNTK supply system. Rather
than benefiting from preferential status, the com-
plexes have encountered continued redtape and bu-
reaucratic inertia. The MNTK for Scientific Instru-
ments reported that it was having to wait two years
to have its orders filled. The Membrane MNTK
could not get access to vans or gasoline in order to
market and service its new products. The Industrial
Lasers complex had a critical need for sophisticated
subcomponents such as optical units, electronic
automated control equipment, and power systems.
One of the participating organizations in the
MNTK refused to produce custom-designed sub-
components and insisted that the complex adapt a
model already in series production.
As long as the Soviet supply situation continues to be
characterized by pervasive shortages, it is essential for
the success of the MNTKs that they receive preferen-
tial treatment. Priority is critical, not only to supply
Secret
the MNTKs to operate, but also to maintain them as
viable organizations for the long term. Soviet develop-
ers of new products cannot operate like those in the
West, who can turn to alternative sources of financ-
ing, manpower, raw materials, and supplies. Without
preferential treatment, the MNTKs will find it ex-
tremely difficult?if not impossible?to meet their
goals within the established deadlines. Further, the
complexes will increasingly limit the number of proto-
types and tailor the design of products to avoid
changes that would require the use of different inputs.
The MNTKs' inability to claim priority status, how-
ever, points to a flaw in the strategy itself. Priority
status becomes meaningless if it is granted too broad-
ly. The breadth and scope of the MNTK activities,
especially when coupled with efforts outside the com-
plexes to develop new technologies, are probably
stretching resources too thin and generatin contra-
dictory and competing claims for resources
In the near future, the supply situation for the
MNTKs could get worse. Because of the political
limelight focused on the MNTK concept, there have
been calls over the past year to form yet more
complexes. Some of those proposed are limited in
their potential impact and do not represent key,
interdisciplinary technologies. Rather, they are efforts
to join the politically popular MNTK bandwagon. For
example, during September 1987 there were calls in
the Soviet press for the formation of MNTKs to
develop videocassette recorders, training simulators
for nuclear power complexes, and influenza vaccines.
The unique nature of the complexes and their priority
status risk overdilution as they become "economically
faddish." If the complexes are allowed to proliferate,
there will be even greater competition for scarce S&T
resources
Systemic Factors
For the most part, MNTKs have been unable to move
their developments beyond the prototype stage and
into series production. Although Soviet press reports
credit MNTKs with successful development of 160
new items of machinery and technologies that were
ready for assimilation during 1987, only 78 of the
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products were included in state orders for actual
production under the 1988 plan. The regime and
MNTK directors have identified two causes for the
shortfall:
? Responsibility to oversee series production does not
clearly come under the purview of the MNTKs.
? Ministries and their subordinate production enter-
prises are reluctant to tackle series production of
new products.
Linking Research to Production: The Gap Remains.
The MNTKs, in most instances, are responsible for
producing only prototypes, although, by decree, they
are tasked with overseeing the development of the
technology through series production. As a result of
this ambiguity, there is no mechanism to ensure that
the prototypes will ever be series produced, and the
regime's goal of creating the MNTKs to bridge the
gap between science and production is falling short.
The late R. A. Belyakov, the head of one of the first
and most successful NPOs, Kriogenmash, complained
that the MNTKs provided only "half solutions."
Belyakov pointed out that "the economy needs new
series-produced equipment, not prototypes."
Many of the MNTKs?for example, Biogen, Cataly-
sis, Metallurgy Machinery, Personal Computers, and
Industrial Lasers?have indicated that they have
encountered resistance from ministries and enter-
prises when attempting to arrange for series produc-
tion based on new prototypes. The head of MNTK
Industrial Lasers, one of the few complexes specifical-
ly responsible for series production, complained that
the Ministry of Electrical Equipment had reneged on
its commitment to produce components and perform
assembly work. As of July 1987, the complex had
satisfied only four of 990 requests for new industrial
lasers that it had received from unspecified organiza-
tions. Even the successful Rotor MNTK has run into
uncooperative ministries?including one of its princi-
pal customers, the Ministry of Machine Tool and Tool
Building Industry?that dragged their feet and tried
to avoid the production and introduction of rotary
technology
The inability of the complexes to ensure series produc-
tion of new technology?to close the gap between
research and production?pointedly suggests that the
11
MNTKs have not addressed the systemic obstacles
that have consistently blocked the introduction of
innovations throughout the economy (see inset).
MNTK heads have pointed to the lack of incentives
for enterprises to produce new technology and the
aversion of producers to the risk associated with
introducing truly new products. Indeed, the regime's
objective for the MNTKs was to attack the bureau-
cratic?not systemic?barriers that have hindered the
development and introduction of new technologies.
The regime probably thought that, by adopting the
methods used by the defense industries to develop
technologies, it could duplicate the latter's success
without drastically disrupting the system.
Emulating the Defense Industrial Sector: The Miss-
ing Link. Although the regime sought to transfer the
strategy used for developing technology within the
defense sector, one critical element was not replicated:
the military customer. The precisely defined needs
and demands of the military for advanced technology
to counter Western threats, coupled with rigid quality
control measures, fostered technological advances
within the defense industries. The MNTK mechanism
is held back not so much by bureaucratic boundaries
and ministerial inertia but by the absence of a
customer who knows what is available technological-
ly, has specific demands in terms of the product and
quality, and is accountable for producing state-of-the-
art goods.
To compensate for the lack of strong demand by a
customer, it is up to the MNTKs to act aggressively to
first identify the needs of their customers and then to
convince them to buy the new products. Most of the
technologies targeted by the MNTKs are embodied in
products that do not "stand alone" and cannot be
easily introduced onto the production floor. Rather,
the new products must be integrated into new produc-
tion processes and require extensive tailoring to the
individual needs of the consumer. In the West, techni-
cally trained marketing teams go out and find appli-
cations and tailor their product to the customer's
needs. On their own, the MNTKs may be able to meet
goals for designing and developing prototypes, but
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Systemic Obstacles to Innovation at Industrial
Enterprises
Western specialists on Soviet industrial managerial
practices have documented over the years the system-
ic obstacles discouraging the introduction of new
technologies?both product and processes?at indus-
trial enterprises. (One outstanding example is Joseph
S. Berliner's The Innovation Decision in Soviet Indus-
try, MIT Press, 1976.) Although the Soviet leader-
ship has sought over the past three decades to
address the obstacles, numerous disincentives have
discouraged industrial managers from actively seek-
ing and encouraging the introduction of new, more
technologically advanced products and processes.
The primary objective for the manager is to fulfill his
production targets assigned under the annual and
five-year plans. Only through plan fulfillment can
enterprise employees qualify for salary bonuses?the
principal incentive that ensures enterprise compliance
with central planning directives.
To meet production quotas, managers seek to avoid
decisions or actions that introduce risk or jeopardize
plan fulfillment:
? New technologies invariably reduce productivity
initially and may even close down production lines
altogether. Losses may not be recouped within the
designated plan period, especially if the plan is even
moderately taut. New products and processes that
appear within a plan cycle are especially vulnerable
to rejection.
? The more innovative the new technology, the more
likely it is that enterprise will have to alter its
supply requisitions or develop new supply channels.
? Increased costs incurred through the purchase or
introduction of new technologies decrease an en-
terprise's profit, a principal indicator of plan
fulfillment.
? Managers have sought to keep production targets
relatively stable?hence predictable?allowing only
for incremental increases. Innovations that hold out
the prospect for significant productivity increases
and substantial plan overfulfillment are avoided if
they carry with their introduction sizable jumps in
plan quotas.
? The introduction of new technology requires per-
sonnel shifts, wage and price adjustments, and,
often, new facilities, necessitating extensive time
and effort to provide documentation and get approv-
al from numerous central organs. Enterprise man-
agers lack the authority to act on their own; for
example, centralized control of capital financing
does not permit them to nurture promising R&D.
? The prices for new technology, or the rubles saved
from its introduction, rarely reflect the degree of
actual innovation. Only plan targets, not prices, are
used by the enterprise manager to make decisions
regarding the use of resources under his control.
? Material rewards for introducing new technologies
at the enterprise are moderate at best and do not
compensate for the risk, whereas penalties for
failure?loss of bonus and possibly one's position?
are stiff and immediate.
? State standards?official directives regarding prod-
uct technical characteristics and performance?
frequently serve as a straightjacket, stifling the
rapid introduction of new technology or products
that may not conform to increasingly obsolete
standards. Enterprise managers will eschew intro-
duction or production of new products or processes
that violate standards, regardless of whether it
represents an improvement.
? New technology may lead to loss of jobs, an
unpopular phenomenon in Soviet society.
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they have not developed a market for them. The
regime risks storing expensive, but unwanted, designs
and prototypes. The heads of MNTKs Membrane and
Thermosynthesis have emphasized that, while they
may be successful in meeting some of their production
goals, they lack customers for the new technologies.
Membrane's chief nervously pointed out that his 1987
production plan targets for membrane filtration sys-
tems and materials were three times higher than the
confirmed demand for these products. The excess
would have to be stored in the warehouse, where it
would sit as "frozen capital."
Although the Soviet Uniori has a "planned" economy,
chronic shortages have also made it a seller's market.
Individual factories that produce according to a plan
provided from a ministry do not have to worry about
selling their product. But because of the tautness in
the plans, there has almost always been more demand
for products than available supplies. Within this
environment, the premium has always been placed on
"production" rather than "selling" and on staying
with the proven product rather than risking experi-
mentation with the new.
Regime Response
Moscow has responded to poor performance by
MNTKs with a variety of measures, most of which
are Band-Aid remedies and none of which address the
key, systemic problems noted above. Recent state-
ments in the Soviet press, however, suggest that the
situation has deteriorated to the point where the
regime is rethinking the appropriateness of the
MNTK mechanism as a catalyst for technological
progress.
Tightening the Screws Through Reorganizations
The regime has sought to improve the viability of the
MNTKs through reorganizations and resubordina-
tions. Such measures aim primarily at overcoming
bureaucratic resistance to the MNTK mechanism and
strengthening centralized control over their operation.
Moscow's original inclination was to give a leading
role to the Academy of Sciences and its institutes. The
regime probably believed that the highly respected
13
Academy would be able to first develop new technol-
ogies and then to have the foresight to determine and
guide their introduction into production. The leader-
ship assumed that the "logic" of advanced technology
and the predicted benefits would be sufficient to
overwhelm conservatism within the industrial minis-
tries.
As early as the spring of 1987, the leadership recog-
nized that the Academy did not have sufficient
experience or prestige to deal with the ministries. Of
the eight MNTKs originally headed by a USSR
Academy facility, three (Personal Computers, Fiber
Optics, and Machine Reliability) were totally resubor-
dinated to a ministry; three (Biogen, Catalysis, and
Thermosynthesis) complexes will assume a "close
affiliation" with ministries, and one (Industrial La-
sers) will continue to be dually subordinate to a
ministry and the Academy (we believe that this will
also be the case with Scientific Instruments). While
making the changes in subordination, the regime may
be using the opportunity to increase the participation
of the defense industries. For example, Machine
Reliability MNTK will be more closely affiliated?
perhaps subordinate?to the Aviation Industry Minis-
try. This closer alignment is indicative of the party's
increasing effort to draw on the expertise of the
defense industrial ministries. The regime probably
expects that, by making the ministries, defense or
civilian, directly responsible for the success or failure
of the complexes, the ministries will more actively and
willingly support the complexes
The leadership has also sought to strengthen central
control over the complexes and to increase the party's
oversight of their activities. The GKNT, as a result of
a recent reorganization and regime decree setting out
its duties, is to assume greater responsiblity for the
development and activities of the MNTKs and their
targeted technologies. At the same time, the GKNT is
to divest itself of involvement in R&D activity that is
limited to the confines of a single ministry. On the
basis of the 1987 decree, it appears that GKNT's
performance will be evaluated in the future by how
effectively it has supported the complexes and assisted
them in meeting their objectives. The regime has also
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strenghthened the role the party is to play directly in
the MNTK operations. The complexes located in
Leningrad, Novosibirsk, and Vladimir have been
placed under the day-to-day control of the local party
organs?presumably so they can exercise their lever-
age to obtain needed resources, housing, and construc-
tion, but also to monitor the complexes' R&D activi-
ties through the institutes' S&T councils and party
organs
Looking Outward
We believe that the original MNTK blueprint, al-
though it included a limited role for East European
participation, had a very narrow role for the West.
(Many of the MNTKs serve as the "head organiza-
tion" responsible for coordinating R&D activity under
the Comprehensive Program for S&T Progress
through the year 2000 formulated by the Council for
Mutual Economic Assistance.) Gorbachev does not
want to depend on Western sources for technology
and has emphasized that the country must?on its
own?develop a strong indigenous base capable of
operating independently. At a January 1988 meeting
with the Soviet media, Gorbachev complained that,
during the 1970s, the foreign currency earned through
oil exports had been used to "thoughtlessly buy
equipment to solve production tasks [and to] purchase
spare parts, without developing our own engineering
and science properly. This import plague actually
stifled the process of scientific and technical develop-
ment... . We found ourselves literally in a corner."
The regime is attempting to balance the national
security imperative of technological independence
from the West with its traditional reliance on infor-
mation on Western S&T activities to advance Soviet
technology.
While the regime remains committed to indigenous
technological development, it is not above seeking
Western help in improving the R&D process. Since
mid-1987 high-level delegations representing Soviet
industrial ministries and the heads of MNTKs have
approached Western governments and businesses to
press for increased contact and exchanges between the
West and the MNTKs. Although the Soviets have
always demonstrated an interest in purchasing West-
ern high-technology goods, their more recent ef-
forts?those tied to the MNTKs and their targeted
technologies?have tended to focus more on deriving
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assistance at the R&D stage. The Soviet leadership
probably is seeking to use such contacts to help
support and advance the complexes until they over-
come current obstacles or until other measures recent,
ly implemented to spur technological development can
have an impact (see below). In August 1987 the head
of MNTK Personal Computers, Boris Naumov, told
the Soviet press that he was seeking to establish a
joint enterprise with a foreign firm as a way to bypass
the bureaucratic resistance and inertia that was
blocking the progress of his MNTK.
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MNTKs through a variety of means:
? Government-to-government exchanges. During the
October 1987 US-USSR preliminary negotiations
for a new intergovernmental scientific cooperation
agreement, the Soviets proposed the inclusion of
several MNTKs as the lead organizations. Similar-
ly, in early 1987 the Soviets proposed to expand the
USSR-Greek agreement to include cooperation with
the Industrial Lasers MNTK, as well as exchanges
in new materials and biotechnology.
? Cooperation agreements with private businesses.
Many of the MNTKs have approached foreign
businesses?especially in the United States, West
Germany, and Japan. Proposed cooperative efforts
would include the exchange of specialists and joint
testing of new ideas and product design.
? Joint ventures. Several complexes?for example,
Welding, Membrane, and Personal Computers?are
seeking to establish joint ventures in which Soviet
and Western enterprises will combine forces within
the Soviet Union to research, develop, and market
new products. In exchange for their managerial
expertise and investments, Western companies are
to receive a share of the profits.
? Licensing of Soviet technology. MNTK Paton
Welding has taken an aggressive approach to licens-
ing its technology to Western countries.
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The defense industries probably support?and may
have encouraged?the shift toward a greater role for
the West in the MNTKs. In any event, they are well
postured to capitalize on increased contacts with the
West's R&D community and to use the MNTK
mechanism as a way to channel benefits back into
their own organizations (see inset).
We believe the regime expects numerous benefits for
the MNTKs through increased contacts with the
West:
? Access to state-of-the-art experimental test bases.
Cooperation with the West is seen as a way to
overcome limited domestic testing and experimental
capabilities. Contact of this type would enable the
complexes to test in the West theories developed
within the MNTKs but blocked from further or
quick development because of the weak test base.
? Acquisition of scientific instruments. MNTKs are
seeking to purchase scientific instruments helpful in
building a domestic experimental test base and for
developin new ?roducts
? Assistance in identifying and developing potential
applications and processes. The Soviets have ac-
knowledged that they expect to use expanded con-
tacts with Western companies to help identify po-
tential applications for new scientific discoveries
and to aid them in overcoming their traditional
difficulty of moving ideas out of the lab onto the
production floor, in
some areas the Paton Welding MNTK has success-
fully developed new technologies and dedicated
customers?including the military?but the com-
plex has been less successful in developing an
efficient process to apply the new product. Paton is
willing to license technology to the West that has
been used in the USSR for the construction of
submarine hull rings, rocket motor casings, and
armor plate. In exchange, Paton is seeking Western
15
MNTKs Pose Export-Control Concerns
The MNTK concept will complicate efforts by the
United States and the Coordinating Committe for
Export to Communist Areas (COCOM) to prevent the
transfer of militarily significant Western technology
to the Soviet Bloc. US and COCOM export-control
guidelines provide for the approval of certain trans-
fers of otherwise restricted technology to Soviet
entities if the end use is purely civilian. Such a
determination is difficult to make when the proposed
end user is an MNTK: many of the numerous partici-
pating organizations conduct varying degrees of de-
fense work as well as civilian research. Furthermore,
some of the MNTK subunits are directly subordinate
to the defense-industrial ministries, and approvals of
high-technology sales to MNTKs raise the risk of
internal diversion; that is, the diversion of the tech-
nology from the approved, civilian end use to a
military one. As discussed in the text, the MNTK
concept is intended, in part, to promote technology
transfer back and forth between the defense and
civilian industrial sectors.
COCOM concerns for technology transfer are not
limited to direct equipment purchases and extend to
all mechanisms currently pursued by the MNTKs to
broaden exchanges with the West. Cooperation agree-
ments including MNTKs will risk the involvement of
Soviet scientists engaged in military research, and it
will be difficult to fashion joint projects that exclude
their participation. The licensing of technology under
joint ventures with MNTKs, although subject to the
same export controls, would also contribute to Soviet
defense programs and industries represented within
the individual complexes.
To make an informed decision on expanding contacts
with the MNTKs, COCOM-member licensing au-
thorities will require hard-to-get information on the
complex members and the extent to which equipment,
facilities, or knowledge are shared among complex
subunits.
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assistance to improve the production process for ap-
plying the technology and thereby overcoming the
problem the complex has had in developing reliable
production equipment.
? Access to information. An MNTK director as well
as a Gosplan official complained at an early stage
that, because of the lack of information concerning
advances in the West, the Soviets had fallen behind.
The director stressed that information on Western
R&D activities was essential to drawing up realistic
S&T forecasts and effectively directing the R&D
effort. Both argued that increased contacts between
MNTKs and the Western scientific organizations
would facilitate access to the information
Scaling Back Expectations
Although the leadership has continued to exert pres-
sure on the MNTKs to fulfill their objectives, Moscow
may be scaling back some goals.
? Although the Personal Computers MNTK was to
oversee the production of 1.1 million personal com-
puters during the 12th Five-Year Plan, Lev Zaykov,
in a speech to the major producers, referred to the
goal of 500,000 units for the entire economy (not
just for educational purposes as had previously been
the case).
? MNTK Membrane was to oversee the production
and use of membranes that were to have a 1-billion-
ruble impact within the economy by 1990. In April
1987 a Soviet newspaper reported that the target for
economic impact now stood at 800 million rubles.
? MNTK Rotor initially was slated to develop 8,450
rotary lines by 1990. As of January 1988 the target
had been trimmed to 6,300 lines.
These leadership actions stem from a growing aware-
ness that its expectations for quick and significant
returns from the MNTKs were not grounded in
reality. During the last year, the leadership has
complained on many occasions that the projected
economic effect claimed by scientists and planners for
new technologies has not materialized. Moscow's high
expectations were probably based on the limited
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examples in which new technology prototypes were
introduced under ideal conditions and benefited from
priority status and leadership attention. Rotary tech-
nology, for example, had been reported to lead to as
much as a tenfold increase in labor productivity,
release hundreds of thousands of workers, and reduce
by three or four times the space required for produc-
tion. The director of one enterprise that installed
rotary lines reported, however, that he had such
difficulty in assimilating the lines that, without the
constant, prolonged, close supervision of the developer
(Koshkin's Design Bureau), his enterprise would not
have been able to start up operations.
The development of robot technology in the Soviet
Union is a classic example of a technology's failure to
meet expectations once introduced. As has happened
in the West, the problems encountered in introducing
a new process technology often lead initially to disillu-
sionment and later to a cautious pragmatism. Soviet
publications indicate that such a reevaluation now is
taking place with robotic technology and its broad
introduction throughout the Soviet Union. Soviet sta-
tistics show that the economy cannot even absorb the
robots that are produced. Of the 13,000 robots pro-
duced during 1986, only 8,000 were introduced. Ivan
Silayev, head of the Machine Building Bureau,
stressed in June 1987 that it was "not enough to just
emphasize the number of robots produced, the coun-
try was already producing more transport robots than
the economy could accept." According to a Soviet
journal article, too many robots were being produced,
and the technology incorporated into them had not yet
"matured." Consequently, the introduction of robotic
technology had not resulted in the anticipated release
of sizable numbers of workers. Robot production
needed to be cut back by one-third to one-half to
permit significant improvement in speed and accuracy
and to incorporate individual robots into integrated
production lines.
Having Second Thoughts: Moving Beyond
the MNTK
By October 1987 the leadership appeared to be
rethinking the MNTK strategy and reevaluating the
commitment to its continued use, especially after the
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new State Enterprise Law came into effect in 1988.
At a GKNT-sponsored conference, scientists, produc-
tion workers, and party and government officials
sought to determine what was hindering the complex-
es from reaching their objectives and what measures
were needed to improve performance. According to
the Soviet press, however, participants debated wheth-
er the MNTK mechanism itself was appropriate and
whether it should be continued. Although the major-
ity thought the MNTK mechanism to be "promis-
ing," a vocal element "denied the usefulness of the
MNTK as a special organizational form." The meet-
ing ended without drawing firm conclusions. Indeed, a
Soviet reporter stated, "It has not yet been possible to
find unequivocal answers to all these questions," and
he acknowledged that "diametrically opposed" opin-
ions were offered on what actions were required.
Conference attendees were apparently unanimous in
their view that the MNTK mechanism must be
changed if it is to be more effective: "Neither the
traditional mechanism of strict planning nor purely
market relations are suitable for the assurance of the
successful transition to qualitatively new levels of
equipment and technology."
Currently, two very different approaches to the diffi-
culties with the MNTKs are being considered: organi-
zational fixes and systemic adjustments.
Organizational Fixes. Some of the contemplated
measures aim at creating yet more organizations?
either larger or smaller than the MNTKs. Proponents
of these solutions continue to operate under the
assumption that bureaucratic boundaries are the prin-
cipal barriers to innovation, and it is only a matter of
finding the right organizational mechanism to over-
come them.
Both Academy President Guriy Marchuk and Acade-
my Vice President Yevgeniy Velikhov have pointed to
the use of small, temporary groupings of scientists and
producers that would be flexible in their membership
and comprised ideally of no more than 100 members.
In December 1987 Velikhov evaluated small, flexible
groups favorably when comparing them to MNTKs.
He contended that the small groups allowed for
greater contact between science and production and
were able to avoid some of the MNTK practices that
17
industry had found objectionable, especially the right
of MNTKs, in conjunction with Gosplan, to dictate
new production regardless of prohibitively high start-
up costs. Velikhov implied that the decision to intro-
duce new technologies at the production enterprise in
order to be rational and to reflect economic concerns
had to be made by producers, though with advice
from the scientific community. To vest scientists and
engineers with the decisionmaking authority risked
irrational conclusions. In February 1988 a Soviet
laser specialist and director of an Academy institute
recommended the formation of small, regional laser
centers outside the MNTK mechanism that could
draw on newly formed production associations to
supply them with needed components. The specialist
thought that such action was necessary because the
Industrial Lasers MNTK was encountering such stiff
resistance from the bureacracy that it had been
rendered ineffective
At the same time, the regime has announced the
formation of State Production Associations (GPO), a
new organizational mechanism that will dwarf even
the huge MNTKs. The GPOs?to appear during
1988?will span research through series production,
as well as through the installation and servicing of
new technologies. It is not yet clear what role the
MNTKs will have within the GPOs.
Systemic Adjustments. The Gorbachev regime also is
rethinking its science policy in general and may be
stepping back from its heavy reliance on a top-down
approach to developing key technologies. The leader-
ship appears to be taking its first, though faltering,
steps to address systemic barriers to the development
and introduction of new technologies. Portions of the
new State Enterprise Law, along with other legisla-
tion published during 1987, indicate that Moscow
may be taking steps to create a more innovative
scientific base?one not so dependent on the top-down
approach to developing new technologies. In some
cases, however, the regime's new measures are incom-
patible with its earlier strategy as incorporated within
the MNTKs. Indeed, a Soviet journal in January
reported that the changeover to the new methods had
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taken the complexes "by surprise." There is the
potential for increased disruption if both approaches
are enacted simultaneously.
We believe that the regime may now recognize that
overcentralization of decisionmaking authority within
the complexes may actually retard or limit the devel-
opment of new technologies. There appears to be a
growing appreciation for the role that competition
plays in advancing technologies. Encouraging compe-
tition among R&D organizations, however, relaxes
the centralized control and runs contrary to the
MNTKs' task of eliminating parallel and duplicative
research.
Although most, if not all, MNTK work will be
financed by the state budget, over half of the scientific
community in 1988 will switch to "self-financing,"
which requires the R&D organizations to cover their
operating costs out of profits earned through research
conducted under contract. Under the new arrange-
ments, many of the individual MNTK subunits will
switch to self-financing and will be granted increased
autonomy entitling them to more independence in
their decisionmaking. These organizations may find it
more advantageous to perform work for customers
outside the MNTK structure, circumventing the au-
thority of the MNTK director to dictate who is to
participate within the MNTK. The regime has not
made it clear how it intends to resolve this potential
conflict of interest. Meanwhile, the country's scientif-
ic leadership appears to be particularly apprehensive
over what effect self-financing will have on the devel-
opment of interdisciplinary?hence interbranch?
technologies:
? "I think that, if the nuclear power industry had
developed on a self-financing basis, it would not
exist now." (A. P. Burdukov, director of a key
institute and design bureau within MNTK Cataly-
sis, October 1987).
? "As our practice shows, under the conditions of
economic accountability, an enterprise is oriented
toward the demands of the moment. For this reason
the fate of developments designed for the long term
becomes more complex: No one orders them from
us. Today it is almost impossible to persuade some
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enterprise to finance the creation of future technolo-
gy." (A. A. Deribas, head of a special design bureau,
Academy of Sciences, October 1987).
While the leadership attempts to turn its scientific
community toward the needs of production, it is also
taking steps designed to stimulate keener interest on
the part of industrial managers to acquire and intro-
duce new technologies. For example, measures have
been introduced addressing quality control, acceler-
ated depreciation and replacement of machinery, and
increased profit margins on technologically improved
products. In his September 1987 speech to the Su-
preme Soviet, Premier Nikolay Ryzhkov emphasized:
Under the new conditions, an enterprise will not be
able to function successfully unless it relies on S&T
progress.... In fact, making every collective as recep-
tive as possible to innovations and giving it a vital
interest in utilizing the achievements of S&T was put
forward as virtually the main task of restructuring."
Over the next few years the regime is likely to
simultaneously pursue both approaches?attempting
to integrate centralized with decentralized methods?
without committing itself. To do so, we expect it will
use the newly created "state orders" to direct re-
sources to priority projects and products. Soviet econ-
omists discussing the obstacles encountered by the
MNTKs have proposed that state orders be issued by
Gosplan and the GKNT for each MNTK, specifying
the basic assignments for the research, development,
and introduction of new products and processes. Fur-
ther, each MNTK would be authorized to issue state
orders to ensure an adequate and timely supply of
needed resources and to levy mandatory assignments
on participants. At the same time, however, MNTK
directors are to seek to negotiate with their subunits
mutually beneficial contracts for supplies and for
research and design work.
While we expect the regime to use state orders to
protect the MNTKs during the disruptive period
when reforms are introduced, their use will not serve
as a panacea and, in fact, is likely to encounter stiff
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ministerial resistance. On the basis of limited Soviet
press reporting, it appears that state orders must be at
least coordinated and probably approved by the par-
ticipating ministries, not just Gosplan and the GKNT.
It is precisely these ministries that are already resist-
ing the erosion of their authority to the complexes.
There will also continue to be conflicting demands
placed on the MNTK subunits, because the ministries
will still levy state orders.
As a part of its effort to delegate authority and
responsibility to the enterprises, the regime is taking a
strong stand against the abuse of the newly created
state orders. The leadership is already complaining
that, rather than being limited to the most important
products, state orders have been distorted to serve as a
substitute for the annual plans in order to fetter the
entire production capacity of the enterprise and to
weaken new measures intended to decentralize deci-
sionmaking
Should the Gorbachev regime increasingly rely on
state orders to address the problems of the MNTKs, it
will indicate that the leadership?at least on the issue
of the development of critical technologies?continues
to resist decentralization of decisionmaking.
Prospects for Success
Falling Short for the Near Term
The MNTKs have not fulfilled the regime's objectives
to date, and we do not expect the situation to turn
around in the short term?the remaining two and a
half years of the 12th Five-Year Plan. Indeed, many
of the MNTKs will fail miserably under the current
conditions.
Although such an evaluation made on the basis of
only two and a half years' performance by the
MNTKs may appear particularly harsh, the obstacles
blocking progress are major and will not be easily or
quickly overcome. Personnel shortages, deficient ex-
perimental test bases, bureaucratic inertia and resis-
tance, and systemic deficiencies will minimize the
impact of the MNTKs throughout this five-year plan.
19
Developing New Technologies. We do not expect the
MNTKs per se to enable the S&T sector to meet
regime objectives. In those rare instances in which we
know the specifics, MNTK plans appear unrealistic in
terms of the number of new products or the impact
they are expected to achieve. In situations in which
complexes do develop a number of new prototypes, we
expect that the MNTKs will be less successful in
moving the prototypes quickly into series production.
In many instances the new products will fall short of
world-class quality. And the absence of an effective
marketing strategy will result in products that will be
difficult to introduce onto the factory floor, require
extensive and time-consuming modification or adjust-
ment when first reaching the enterprise, and perform
at appreciably less-than-planned levels.
Shortening the R&D Process. The MNTK mecha-
nism will not appreciably shorten the R&D-to-produc-
tion cycle during the current five-year plan. A few
products may be developed in a somewhat shorter
period of time, especially as MNTKs struggle to show
some success, but these successes will be attained only
through a total focus of effort and resources to the
potential detriment of broader, yet slower, progress
across a whole technology.
Strengthening Exchange Between the Civilian and
Defense Sectors. It is feasible?perhaps even likely?
that the MNTKs will be successful in tapping the
defense industries for support. Defense industry insti-
tutes and design bureaus are probably willing to give
guidance and some resources to assist the MNTKs?
especially in areas in which the industry stands to gain
appeciably with only minimal expenditure of its own
resources. A recent call by a defense industrial deputy
minister to form an MNTK on composites indicates
that at least some of the defense sector support the
MNTK concept as a way to derive benefits for their
interests. On the other hand, the resistance that the
Personal Computers MNTK has encountered from
the defense industry ministries indicates that the
complexes are not receiving wholehearted support.
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During the last year, we have seen the association
between the defense industry and the MNTKs in-
crease, especially as a result of resubordination of
some of the MNTKs from the Academy to ministries,
and the defense industry sector may be tapped yet
harder to support the MNTKs. Especially as the
complexes fall increasingly short of the regime's goals,
the leadership will be tempted to turn to the defense
industries for increased support?particularly in the
case of those technologies in which they have acquired
the most experience: rotors, computers, robotics, new
materials, and machine reliability and testing. The
defense sector probably will be looked to as a source
of designers, experimental test facilities, and special-
ized production capabilities.
Long-Term Prospects
The MNTKs' success in producing significant results
and serving as a mechanism to rapidly advance key
technologies over the long haul hinges on how the
regime resolves bureaucratic resistance, whether it
attains priority status for the MNTKs, and how it
refines the model.
Overcoming Bureaucratic Resistance. The regime
faces a long and uphill struggle to overcome bureau-
cratic resistance and inertia?especially within the
ministries, but also within the relatively independent
Academy of Sciences. Overcoming obstacles to inno-
vation posed by bureaucratic boundaries is but one
element of Gorbachev's efforts to redefine the role the
ministries are to play within a more decentralized
decisionmaking environment. The regime must move
quickly to establish the MNTKs as the primary
authority over the various subunits?at the expense of
the industrial ministries?rather than continuing to
let the subunits serve two competing and often war-
ring masters. As evident by the complaints now being
registered by the MNTK directors, continued divided
authority could result in paralysis.
Gorbachev stands a better chance of succeeding here
than in other areas. While we believe the General
Secretary has demonstrated the determination and
dedication to break through the logjam of conserva-
tive managers, he has yet to demonstrate success.
Assuming that he continues his pressure on the
Secret
bureaucracy and policy of cadre renewal, a more
supportive and capable bureaucracy could be in place
by the early 1990s
Staking Claim to Priority Status. For the MNTK
mechanism to be even marginally effective, it must
have priority access to scarce resources such as scien-
tific instruments, new construction, experimental test
facilities, specialists (especially designers) and special-
ized subcomponents, as well as financial assistance.
The MNTKs will face competition from all sectors?
including the defense industries?for these items, and
we think the complexes are not likely to receive
preferential treatment, especially as competition is
heightened during the switch to a more decentralized
supply system.
Refining the Model. The MNTK strategy contains
weaknesses that, if not addressed, will severely limit
the potential of the complexes to spur long-term
technological development at the pace and quality
dictated by the regime. These missing links will act to
limit the viability of the MNTKs and will sharply
curtail their effectiveness. As the MNTK charter now
stands?stopping at prototype development?it does
not connect research to production. Thus, even when
the MNTKs have developed prototypes, there is no
assurance that enterprises will assume series produc-
tion. We believe, therefore, that the effectiveness of
the MNTKs will be severely limited as long as the
Soviet economic mechanism does not provide a strong,
well-informed customer who has a direct interest in
exercising his right to shape product design or quality.
In the absence of such customers, the MNTKs would
have to market their products aggressively to bridge
the research-to-production gap. We believe that, if
this issue is not addressed, the technological advances
coming out of the MNTKs will not be disseminated
widely throughout the economy. To date, Moscow has
barely recognized this deficiency.
Failure on the part of the MNTKs to meet the
regime's objectives does not mean that the Soviets will
not be successful in developing the targeted areas. The
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leadership may be able to achieve significant results?
but they will be reached primarily in spite of (or
outside) the MNTK mechanism, through steps decen-
tralizing economic decision making. Much will de-
pend on how these measures?self-financing, competi-
tion?are implemented. The new decentralizing
measures, however, when coupled with the highly
centralized strategy used by the MNTKs, have a
greater potential to disrupt both efforts than to be
mutually supporting.
If Gorbachev's decentralizing measures are more
successful in spurring innovation, the regime may play
down or even eliminate the MNTKs. In the interim,
during which the measures are implemented, the
MNTKs will continue to limp along, with the regime
using state orders as a crutch to provide funds, scarce
resources, and ministerial assistance. If the new mea-
sures are not successful, then MNTKs can be expect-
ed to be reemphasized with increased pressure put on
ministries.
If current obstacles are overcome, and the regime
successfully integrates and balances the effects of its
numerous and, at times, uncoordinated reform mea-
sures, the MNTKs may make an impact by the mid-
1990s. By that time, the MNTKs that enjoy strong
directorship and moderate ministerial support should
be able to show at least some limited technical
advances and new products. The targeted technologies
are not "blue-sky ideas" that would require a long and
risky basic research effort to achieve a technological
breakthough. The MNTKs should be able to modestly
improve the rate of return on investment in their
R&D efforts: product quality will be enhanced
through prioritization of effort and improved feed-
back from producers and end users, and diffusion of
results will be broader because of the numerous
ministries drawn into the MNTK effort. Similarly,
the MNTKs, benefiting from improved and shortened
communication lines, should be able to shorten some-
what the lengthy R&D process.
Implications for the West
As one way to overcome bureaucratic and organiza-
tional obstacles, the regime will probably make a
concerted effort to gain whatever benefits and assis-
tance possible by increasing contacts and scientific
21
exchanges between the MNTKs and the West. As
competition for scarce resources become fiercer, we
expect that the MNTKs will turn increasingly to the
West for scientific instruments to develop an infra-
structure for testing their R&D results. We also
expect that the MNTKs will pursue such contacts
with the motive of gaining access to state-of-the-art
test bases and expediting the development of proto-
types. Such joint ventures would also allow Western
market forces to be used as a proxy for consumers and
competition and the role they play in directing and
encouraging technological advance. The MNTKs will
particularly look to joint ventures to help them identi-
fy and develop applications for their new scientific
discoveries.
It is ironic that the defense sector probably will reap
greater benefits than its civilian counterparts through
the use of the MNTK mechanism. Defense interests
are well represented in the long-range plans and S&T
programs that the MNTKs have drawn up, especially
in those complexes known to have direct ties to
defense industrial organizations. Because it is a pow-
erful and knowledgeable customer, the military will
be able to capitalize on any achievements the com-
plexes may develop. The defense industries have the
well-developed infrastructure to identify, acquire, and
rapidly assimilate technological advances, and the
military will have the resources and the authority to
ensure that products of interest to them are prioritized
and nurtured until completion. Similarly, the defense
sector stands to gain through technology transfer as
MNTKs expand their contacts with Western coun-
tries through cooperation agreements and joint ven-
tures.
Even if the regime is able to resolve the numerous
obstacles limiting the MNTKs, they will not be able
to compete with R&D complexes in the West in
spurring broad-based technological advancement. The
MNTKs' top-down, command approach to innovation
probably condemns the Soviet Union to perpetual
follower or catch-up status. The practice of targeting
and prioritizing specific areas for forced development,
and placing control within one organization under one
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director, limits spontaneity and flexibility?essential
elements for innovation and creativity. Similarly, the
negative effects of targeting are even greater when the
areas to be targeted are based so heavily on copying
what is already in production in the West. Even in the
defense sector, the success of the approach is only
relative to the failures of the civilian economy. Tech-
nological development for the defense industries has
consumed massive quantities of resources and has
produced generally evolutionary, rather than revolu-
tionary, results.
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Appendix
MNTK Goals and Results
(Reported in the Soviet Press)
Goals
Achievements
Anticorrosion
To develop new types of technology and processes
for corrosion protection that provide increased
strength of materials and reliability of machines.
None noted.
Biogen
To develop methods for genetic and cellular
engineering and the latest generation of com-
pounds for medicine and agriculture, including:
insulin, interpheron, human growth hormone, im-
munostimulators, anticancer compounds, and
hormones for cattle growth.
As of December 1987, had developed "more than 120
different items, including unique preparations, chem-
ical reagents, and scientific instruments." One such
item is Interferon Alpha 2, intended for treating
hepatitis.
Biogen head stated that he had not received the
resources necessary for testing and production; there-
fore no production was envisioned until 1995-2000.
In order to meet its goals for the 12th Five-Year
Plan, Biogen needed greater administrative author-
ity, economic independence, and better financing.
Geos
To develop a unified system and methods for the
study of Earth's mineral resources. Collection of
information is to be at four levels: space, air,
ground, and well shaft.
None noted.
Catalysis
During the 12th Five-Year Plan, to create 80
percent of all new catalysts for the Ministry of
Chemical and Petroleum Machine Building and
Ministry of Mineral Fertilizer Production, a total
of 71 assignments.
Credited in 1987 with the replacement of the catalyst
used within the sulfuric acid industry.
Though the MNTK had "models on the shelf" to
develop when first created, it still has been slow to
develop new products.
Unless left alone and not disturbed by ministries, the
complex is likely not to meet its objectives.
Mechanical Processing
For the 12th Five-Year Plan, to produce several
new generations of machinery for the processing
of mineral resources.
By 1990, to obtain an economic impact of 100
million rubles; by 2000 it is to obtain an economic
impact of 2 billion rubles.
Had developed by March 1987 new types of special
equipment, but numerous ministries were indifferent
and prevented series production.
Membrane
To produce 32,000 square meters of membranes
in 1987.
To increase production tenfold by 1990.
In 1986, announced that it was to obtain an
economic impact of I billion rubles by 1990. In
1987, announced that it was to obtain economic
impact of 800 million rubles by 1990.
As of May 1987 the complex was "living on the
scientific reserves" that existed before the formation
of the MNTK and had not gone beyond prototype
development.
In 1987, developed a process to separate runoff paint,
with an economic benefit of 1,430 rubles per square
meter of membrane. The director admitted that such
results were few and far between.
This MNTK could not count on any significant
change in its negative state of affairs, and there was
little hope of being able to quickly bring membrane
technology up to acceptable levels.
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MNTK Goals and Results (continued)
(Reported in the Soviet Press)
Goals
Achievements
Eye Microsurgery
Not known.
Cure rate was 96 to 98 percent.
Reduced time spent by patients in hospital.
Reduced costs for treatment.
Had higher labor productivity than that in similar
medical institutes.
Machine Reliability
To develop diagnostic hardware to make possible
a twofold to fivefold increase in reliability and
service life of machinery.
To develop new structural materials and harden-
ing processes to increase machine durability.
The lead institute, not the MNTK, claims to have
developed a prototype of a fundamentally new robot
based on "resonance effect" that cuts power con-
sumption by one-fifth to one-seventh, incorporates
composites, and increases reliability.
Developed a test bench for Red Proletariy to evaluate
accuracy of robot movement.
The director of one of the complex's facilities com-
plained that the quality requirements were unrealis-
tic and could not be achieved; they were based on
specifications distorted by Western marketing
specialists.
Oil Extraction
To develop hydrodynamic, thermal, and physical
chemical methods for increasing petroleum recov-
ery operations 6 to 12 percent.
This MNTK was on paper only for at least its first
full year.
Its lead institute was so ineffective that the MNTK
was resubordinated and placed under the leadership
of a different institute.
Scientific Instruments
To double the production of scientific instruments
by 1990.
To cut the R&D time of five to seven years by
one-half to two-thirds.
To produce by 1990 one-third of all scientific
instruments in the country.
By 1990, production of scientific instruments for
the entire country was to amount to 300 million
rubles (100 million for the MNTK).
In 1986 the entire Academy (the MNTK's parent
unit) produced 40 million rubles' worth of
instruments.
Paton Welding
To develop new materials through electrometal-
lurgy and new methods of welding.
For the 12th Five-Year Plan, to save the country
"millions of tons" of ferrous metals and to replace
"tens of thousands" of workers.
During 1986 the lead institute developed a protective
coating and a process for its application.
Paton earned 1 million rubles in convertible currency
from licensing during 1987.
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MNTK Goals and Results (continued)
(Reported in the Soviet Press)
Goals
Achievements
Personal Computers
For the entire country (not just the MNTK), to
produce 1.1 million computers by the end of 1990.
To develop within the 12th Five-Year Plan period
a "whole range of world-level microcomputers."
Production in 1988 to increase by 140 percent
over that of 1987.
The MNTK displayed a YeS 1840 "general purpose
computer" at a March 1986 exhibit.
The MNTK director has admitted to falling short of
plan goals because of bureaucratic obstacles.
Had to rewrite its plan in 1987 because its proposed
R&D activities were not at world levels.
Powder Metallurgy
Expects to save from the transfer of each 10,000
tons of machine-building items to powder metal-
lurgy: 180 metal-cutting machines, 190 workers,
and 1.3-1.8 million rubles.
As of February 1987, the complex had not achieved
planned production objectives. The press and furnace
equipment needed for powder metallurgy production
did not meet requirements. As a result, the quality of
metal powders was unstable.
Robot
Responsible to head the nation's effort to create
robotized complexes and flexible automation sys-
tems that will lead to two-and-a-half to fivefold
increase in productivity.
For the entire country, 86,000 robots are to be
introduced during the 12th Five-Year Plan (in
1986 there were 20,000 robots in the whole
country).
By 1990 to develop 20 new robot models that will
serve as the "forefathers" of the entire system of
industrial robots.
To develop, by 1986, reliable control units capa-
ble of operating without failure for 2,500 hours.
As of 1987 the MNTK was "unable to meet its most
important assignments."
One of its principal units was criticized for having
only entered three robot models in series production
after seven years of work.
In 1985, 5,000 robots produced; for 1986, 13,000
produced, 8,000 installed; for 1987, 11,000 installed.
In 1986 it had to rewrite its production plan because
many of its proposed areas for research were not at
world levels.
Rotor
To conduct a 1-billion-ruble program during the
12th Five-Year Plan for the development of rota-
ry technology.
To produce 8,450 rotary lines by 1990. (This goal
was later readjusted downward to 6,300 lines.)
Production for 1988 to increase by 110 percent
over 1987.
During 1986, 150 lines introduced.
During 1987, 300 lines introduced.
As of February 1986 the MNTK was not performing
to its full potential.
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MNTK Goals and Results (continued)
(Reported in the Soviet Press)
Goals
Achievements
Industrial Lasers
For 1989, to produce 200 units and 300 for 1990;
by 1990, to produce "hundreds" of laser units
with power of I kilowatt or more.
The complex seeks within the "near future" to
produce 1,000 units yearly.
To increase service life from 1,000 to 3,000 hours
between breakdown.
To combine activities of MNTKs Personal Com-
puters, Robots, and Machine Reliability for the
? development of new production processes.
To develop lasers for medical use, measuring
equipment, machining centers, and robots.
Produced 28 lasers and laser units in 1987.
As of July 1987, the MNTK had received 990
requests for new industrial lasers but had only satis-
fied four of them because of conflicting and compet-
ing demands.
Developed in 1987 a laser called Lantan 3 (Lanthan-
aum 3), but the factory could not produce it because
of a lack of technical documentation.
As of 1987, the complex's activities were "more and
more taking on the character of bureaucratic
warfare."
Only a few of the many types of lasers it had to
develop have been brought up to production stage,
and these were?according to the Soviet press?
inferior to foreign models.
Thermosynthesis
To develop the process of self-propogating high-
temperature synthesis for the manufacture of
materials with increased heat and wear
resistance.
Its results had not found widespread application
within the machine-building sector; there was little
interest in the technology.
Fiber Optics
To conduct basic R&D for series production of
fiber-optic light guides, cables, transmitters, and
devices for collecting and processing information.
Prototypes are to have increased reliability and
resistance to cold.
To shorten the time from R&D to introduction
two and a half years.
Was in embryonic form and could not commit to a
date to start series production.
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