updated 11/5/2004 6:31:11 PM ET 2004-11-05T23:31:11

Russia is seeking to slow the brain-drain of computer specialists and increase software production, a top government official said Friday, in an effort that some hope will help diversify the country's oil-dependent economy.

Dmitri Milovantsev, deputy minister for information technology and communications, said the government might consider introducing tax free zones and creation of places similar to California's renowned Silicon Valley — home to some of the world's leading hardware and software developers.

The government will discuss those and other measures at a Nov. 18 government meeting on the subject, he said.

Milovantsev said the measures ideally would make the sector attractive enough to slow the large-scale emigration of Russian IT specialists. He could not estimate how many Russian IT specialists were currently working in the United States, Germany, Netherlands and Israel, but said there were "definitely a lot."

"Russia has the highest percentage of highly qualified engineers in the world, however the country's share in the international software market is only 0.6 percent," Milovantsev said.

Milovantsev acknowledged that there is a lot of skepticism about the ministry's initiative to promote software production.

"Then again, no one believed mobile phones would take off in Russia, and now we have a 42 percent penetration rate," he said.

Russian software and IT market could be worth between $4.5 billion and $5 billion in 2004, with export revenue reaching $500 million this year, Communications Minister Leonid Reiman has estimated.

Russia, which depends on oil and natural gas industry for 60 percent of its budget revenue, wants to diversify revenues for better financial security.

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