Andrei Yakovlev
«Our task was to produce a new generation of specialists in Russia who possess knowledge of modern economics and the social sciences»

How my family influenced me

I realized what I wanted to do when I was in the eighth or ninth grade, about fifteen or sixteen years old. In many respects, I was influenced by the conversations I use to have with my family. I knew much more about Soviet reality than many of my peers. My grandfather and grandmother were journalists. My grandfather was arrested twice under Stalin and subsequently spent eight years in prison and in camps. He died before he reached the age of sixty. My grandmother lost her job because she refused to divorce him and went with him to the camp. Nevertheless, she was a believer in communist principles until she passed away in 1986.

What was happening in the country was very openly discussed in our household: the use of the term "cult of personality" at the 20th Congress of the CPSU, the novel Doctor Zhivago (my grandmother and grandfather knew Boris Pasternak), workers being shot in Novocherkassk (my mother's half-brother was there and saw everything with his own eyes, and then, when the coup d’état attempt occurred in 1991, he defended the White House), the ousting of Khrushchev in 1964, Solzhenitsyn's books, the anti-Semitism under Stalin and Brezhnev, the events in Czechoslovakia, the war in Afghanistan.

I remember my grandmother arguing in our kitchen in 1981 with an old friend who married an Italian communist during the war and left for Italy. My grandmother proved to her friend that the USSR had been forced to take troops into Afghanistan. My interest in politics was sparked early, but political science as a subject didn’t exist in the USSR. Thus, at the time, I had the choice of either economics or philosophy. The best option ended up being political economy at the Faculty of Economics at Moscow State University.

My changing attitude towards communist ideals

Initially, I was a believer in socialist ideas (and had probably, to some extent, been influenced by my grandmother). My first classes at the Faculty of Economics at Moscow State University, which were held by Viktor Nikitich Cherkovets, were aligned with these ideas. However, in the spring of 1987, in a class on ‘conflicts associated with sustainability as the initial relation of production in the socialist economy’, I came to the conclusion that a planned economy generates a monopoly – which has a characteristic tendency to decay. For this unit, Cherkovets, a major figure in the ‘political economy of socialism,’ awarded me a final score of 4, without giving me any explanation whatsoever. It was at this point that I realized I had to get a new academic supervisor.

Here, Viktor Lvovich Gutenmacher played an important role. He was an employee at the Department of Mathematical Methods of Economic Analysis. It was he who advised me to approach either Yevgeny Grigoryevich Yasin or Revolt Mikhailovich Entov about undertaking further postgraduate studies under their supervision. It is interesting that in the end, just a few years later, we all ended up at the Higher School of Economics. In the summer of 1987, I attended interviews at Entov’s department at the Institute of World Economy and International Relations (IMEMO), and then with Evgeny Grigorievich at the Central Economics and Mathematics Institute (CEMI). In the end, I decided to go with Evgeny Grigorievich. At the time, IMEMO was probably closer to the modern standards of economic science, but Yasin's department at CEMI attracted me with its very lively and creative atmosphere and the fact that practical results, for which we had to collect and process a whole lot of dull empirical data, were evident.

The path to science

My scientific work began at the USSR State Committee for Statistics and continued at Gossnab. From the mass of information filed, I had to record data in a notebook on how many metal products - nails, wire, wire mesh - Soviet factories produced. I did the same for cement, tractors, cars and other products which were scarce. At the same time, I rarely talked with Yasin - at the end of 1987 he moved from CEMI to the Economic Reform Commission which was headed by the academic, Leonid Abalkin. My direct supervisor was Volodya Tsapelik, then a junior researcher in Yasin's department, who, in the late 1990s, became deputy chairman of the Anti-monopoly Committee, and is now a wine critic.

Nevertheless, no sooner had I taken on this work, in 1988, Tsapelik and I found ourselves responsible for a project examining monopolism in the Soviet economy, which CEMI was carrying out for Gossnab and the results of which were repeatedly discussed in the government. The empirical data collected as part of the project formed the basis of my Ph.D. thesis at the Department of Statistics at the Faculty of Economics at Moscow State University. By the time I completed my thesis, I had published six articles in journals such as Issues of Economics and Bulletin of Statistics, and even in Communist, where Yegor Gaidar was working as the editor in the economics department. Data from my thesis, including concentration ratios from industry sectors in the Anti-monopoly Committee, were used until the end of the 1990s, at which point such data began to be collected by Rosstat.

Commodity exchanges, business journalism and international relations

In parallel with my job at CEMI and my PhD studies at MSU, some of my fellow students and I founded the Institute for Organized Markets Research - one of the first private scientific research institutes in the country. We specialized in commodity exchanges, which had become extremely popular in 1990-1991, because it was possible to sell goods produced ‘outside of the plan’ at free prices (this was made official in a ruling by the Council of Ministers of the RSFSR in March 1991). We prepared statues for the stock exchange and regulations on trade, we trained hordes of brokers in trading technologies and carried out analyses of the stock exchange for articles and reviews published in business media: Kommersant, Economics and Life, Business World, Financial News, Business-MN and many others. I have kept several ID cards from those days which are adorned with the word ‘PRESS’.

All this, of course, was not science, but consulting. I left CEMI for the Gaidar Institute, together with Yasin's department, at the end of 1991, where I started off working with the stock exchange (as well as the product markets). The Soviet commodity exchanges were my first step towards international research projects. In 1993, I ended up (completely by accident) at a summer school for teachers from Moscow State University and St. Petersburg State University at the University of Tübingen. One of the courses there, taught by Professor Rainer Schoebel, was on financial futures. In the spring of 1993, they launched something known as ‘currency futures’ on the Moscow commodity exchange. These were supply contracts valued at ten US dollars, and they were to be fulfilled within three months. And, as we were working with the Moscow commodity exchange, I had access to detailed information about them.

I approached Schoebel and told him about this idea. He was interested in the history of the exchange market that was emerging before our eyes and invited me to do an internship in Tübingen with funding from the German Academic Exchange Service (DAAD). We applied and were subsequently awarded a research grant as part of the Tacis ACE program. Vladimir Bessonov and Anatoly Peresetsky, who are now also working at HSE, also participated in this project and represented the Russian side. I can’t speak for them, of course, but for me, the conversations I had with Schoebel at his home near Tübingen were the first step towards understanding the principles on which modern economic science is based, as well as the role played by peer-reviewed journals and where the boundaries lie between academic research, applications and consulting.

How I ended up at HSE

From the outside, it may seem like this also happened purely by chance. The Institute for Economic Policy (IEP), where I became the lab head, was located in Gazetny Lane. This also happened to be where the Higher School of Economics was leasing its first premises. Classes were held in a building on Prospekt Sakharova which at one time housed the former MCC Gosplan, and there were only a handful rooms for management staff. During the summer of 1993, I ran into Yaroslav Kuzminov in the stairwell. Kuzminov immediately asked if I would be interested in starting at HSE as pro-rector for science. By that time, the Gaidar Institute had become a renowned scientific center and the position of the head of the laboratory I held at the IEP, at the age of twenty-seven, gave me a certain amount of status. I was also Chief Scientist at the Institute for Organized Markets Research. Of course, the pro-rector position would have been a full-time job, but I had no idea what HSE was all about. Following a more in-depth discussion with Kuzminov, we agreed that, to begin with, I would work part-time as the head scientific researcher for a period of 2 months.

Why did I decide in the end to come to HSE? Because, in comparison to the Gaidar Institute, HSE offers a much more comfortable environment – one without formal hierarchies, where we enjoy a high degree of autonomy and creative freedom. And, unlike the Institute for Organized Markets Research, it was possible to do research at HSE without having to constantly think about the next contract. Looking back, I can say that my arrival at HSE, and the fact I ended up here with Yasin, Entov and many other classmates and colleagues, didn’t really happen by accident. The Higher School of Economics was, and, I hope, will remain, a place for active people who want to engage in academic activities.

Science at HSE in the mid-1990s

My main task as a pro-rector was to coordinate science at HSE. The first laboratories and projects run by Igor Gurkov, Svetlana Avdasheva and Yuri Danilov were launched as early as 1994. All three graduated from the economics department of Moscow State University. I studied together with Avdasheva and Danilov; Gurkov was slightly younger than us. In 1994, HSE was incorporated into the portfolio of the Ministry of Economy, and we received our first financing. And, when Yasin became Minister for the Economy in late 1994, we were able to launch a large project monitoring enterprise behavior. The basic idea of the project was to understand what was really happening in the Russian economy on the micro level.

The government’s approach (first under Gaidar, then under Chernomyrdin) was one which limited the money supply, and, along with the Central Bank, stabilized the exchange rate, tightened budget constraints for firms and launched privatization processes. All this was done to deal with the ways in which firms are supposed to react; reactions which were described in the standard textbooks. However, in reality, firms reacted completely differently: they continued to produce goods that could not be sold, which they then exchanged by bartering, they didn’t pay taxes, they withheld workers' salaries, and yet they didn’t go bankrupt.

Almost all the groups that were involved in analyzing enterprises at the time - the Russian Economic Barometer group at IMEMO, Sergey Tsukhlo’s laboratory at the IEP and colleagues from the Institute of Strategic Analysis and Development of Entrepreneurship (ISARP) - participated in this project. However, HSE was the main coordinator. Conclusions were drawn concerning the causes of bartering and non-payments, as well as forms and mechanisms of tax evasion. The Institute for Industrial and Market Studies (IIMS), established as part of HSE in 1997, grew considerably as a result of the project.

The Institute for Industrial and Market Studies

This institute was founded by a group of laboratories engaged in microeconomic research. In addition to monitoring enterprise behavior, the Tacis ACE programs played an important role in the development of the institute as they provided opportunities to conduct research in collaboration with European universities. Such projects were supervised by Igor Gurkov and Svetlana Avdasheva. A little later, several colleagues from the ISARP joined IIMS - Tatyana Dolgopyatova, Victoria Golikova and Olga Mikhailovna Uvarova. In the early 2000s, we carried out interesting research into corporate governance. The funding was provided by the Moscow Public Science Foundation (MPSF).

In 2005, we launched a joint project with the World Bank which examined the competitiveness of the Russian manufacturing industry. We carried out two more rounds of the project (in 2009 and 2014) and are currently in talks for a fourth. However, in my opinion, one of our key conclusions was drawn using data collected in 2005. The data pointed to massive gaps in productivity between enterprises in the same industries. That is, the productivity of 20% of the best firms and 20% of the worst firms in machine building differed by a factor of nine to ten, and in other sectors (e.g. food industry and woodworking) this factor was as big as twenty-three or twenty-four. So, there existed competitive firms, and alongside them were the ‘living dead’- firms which should have closed ten to fifteen years ago, but instead continued to function, consuming resources and not producing added value.

The reason for this was that such enterprises, as a rule, were located in small towns where there was not sufficient infrastructure or demand. Furthermore, their closure would have given rise to acute social problems and thus the authorities continued to subsidize them, either directly or indirectly. We concluded that different policies were needed for different types of firms – the leaders should not be held back, the laggards should be given an ‘out’ with minimal social consequences and the rest (the ‘middle ground’) should be assisted in developing the skills and competencies necessary to successfully compete on the market.

The April International Academic Conference

Science is the production of new knowledge. In this process, not only do research projects and research centers play an important role, but the forums where results are presented and discussed are also an integral aspect. The April International Academic Conference is such a forum. It is the brainchild of Yevgeny Grigorievich Yasin. For many years, I was in charge of organizing the conference as pro-rector and to this day, I am the vice-chairman of the committee. Initially, it focused on discussing issues surrounding economic reform in Russia, with the participation of officials and international experts. The World Bank has been an active participant since the inaugural April conference held in 2000 and remains our constant partner.

Over time, the format of the conference has changed. Today, it is the country’s leading conference on economic and social sciences, focusing not only on Russia, but on all countries with transition economies. Out of approximately five hundred reports included in the April Conference over the past few years, about a hundred have been presented by foreign colleagues. This includes leading scientists whose participation in the conference was financed by large companies- funding secured by Evgeny Grigorievich. However, a significant number apply off their own bat and come to us because they are interested in presenting their results here and getting a reaction from their Russian colleagues. In turn, for the Russian researchers working in the social sciences, the April Conference played and plays a very important role in setting and promoting academic standards.

ICSID and the global migration of scientific staff

Since 2011, the work of the IIMS has been complemented by the International Center for the Study of Institutions and Development (ICSID), which we created together with Columbia University Professor, Timothy Fray. In terms of results achieved and the number of employees, ICSID meets the institute’s standards. The IIMS mainly conducts economic research, including analysis of competition policy, corporate governance and enterprise competitiveness, whereas ICSID focuses more on interdisciplinary topics.

Initially, we analyzed the Russian regional elites. We tried to understand how the behaviorial patterns of these elites affected regional economic development. Then, new topics began to arise - collective action and social capital, the influence of power politics on business and incentives in bureaucratic functions. Geography has expanded - now empirical data is used not only in Russia, but also in other post-Soviet countries, as well as China. In order to cover such a wide spectrum, political scientists, sociologists, and geographers work together with economists at the Institute.

The ICSID boasts a high proportion of young researchers, both among the Russians and their foreign counterparts. In the ICSID team in the early days, along with senior researchers (such as Tim Fry, Thomas Remington and John Reuters), were Fry’s PhD students - David Jaconi, Israel Marquez, Noah Buckley. And they worked alongside Russian researchers: Evgenia Nazrullaeva, Guzel Garifullina, Anton Sobolev, Anton Kazun. After working for several years at ICSID, many of the Russians left with their new knowledge and skills to undertake promising PhD projects in the USA.

I consider this to be a natural process. We have become part of the global scientific space- someone leaves, and someone else arrives. After working at ICSID, Michael Rokhlitz became professor at HSE, as did Israel Marquez. Last year, Michael received a very attractive offer from our partner, Alexander Liebman, and has gone to work with him at a university in Munich. However, for the most part, former employees of ICSID tend to stay on at HSE as associate fellows. Those students who left us three or four years ago will soon be defending their theses. And I hope that they consider HSE when they think about launching their academic careers.

Ways to attract young researchers

The decision to focus on attracting young people to the IIMS was largely the result of internal discussions around our development strategy in 2009-2010, when my colleagues and I realized that, without an influx of young researchers, the institute would gradually become less and less active. And it’s possible to tap into the pool of young researchers by connecting with the student audience. Obviously, teaching is time-consuming and, the more one teaches, the less time one has left for science. But at the same time, involvement in the learning process reduces the expenditure associated with finding strong, motivated students for research. Therefore, I began to encourage my IIMS colleagues to take on a teaching load - in different faculties. They now conduct classes for students who are economists, sociologists and political scientists. I myself work 0.25 as a professor at the Department of Theory and Practice of Public Administration.

One of the ways we attract strong students to IIMS and ICSID projects is through a grant program for young researchers. We run an annual competition for senior and postgraduate students on topics that are of interest to the Institute or the Center. In the first round of the selection process, students submit their CVs and their written work is examined. This is followed by an interview. From around 35 applicants, we select five or six. The grant provides funding for eight or nine months, and the recipient then writes an article which should meet the standards set by leading Russian scientific journals. The research work is carried out together with a project supervisor from IIMS or ICSID, and is divided into stages.

The project begins with the grant recipient writing a literature review on the topic. The second stage involves the preparation of a presentation, which is given at an IIMS seminar. The third and final stage involves writing the article. The grant is paid in three parts, after the results of each stage are submitted. This way, it’s possible to retract the grant if intermediate results don’t meet expectations. Very often, only half of those who are awarded grants make it to the end of the project. Nevertheless, the grant scheme works well, enabling us to optimize our expenditure in the search for gifted young employees. A good example illustrating the success of this initiative is Anton Kazun. Anton started with us as the recipient of such a grant while he was a first-year Master's student. He is now completing his postgraduate studies and teaching and conducting his own research projects (with a focus on power politics in business). Anton also has five publications in foreign peer-reviewed journals.

How HSE has changed over the past twenty years

The first grant awarded by the European Union funded the founding of HSE in 1991. The grant outline indicated that it would be a school of economics producing 100 to 200 students a year possessing a ‘normal’, that is, European, level of economic education. The Russian Economic School and the European University were founded on pretty much the same idea, at more or less the same time as HSE. However, today, HSE is a large multi-disciplinary university boasting a very wide range of educational programmes. This chain of events corresponds to our mission which had been articulated at the very beginning: to produce a new generation of specialists in Russia who possess knowledge of modern economics and the social sciences. This is why, in the late 1990s, in addition to the Bachelor's and Master's programmes in economics, we had already founded faculties in management and sociology, in law and political science. Then, in 2002, there was a further quantitative leap, when we opened another five new faculties.

Rapid growth, of course, has had an impact on the atmosphere at HSE. In the 1990s, the university was attractive because it offered a comfortable environment: a small organization with very few formalities and regulations, where it was always possible to talk to your boss. It has since become somewhat more formal. It's probably easier for me to knock on certain doors than it is for others, simply because I've been working here for a long time. Those who arrived later experience more difficulty in solving administrative issues. This is largely due to external factors. We work closely with the government from whom we receive a large amount of financing, which brings with it certain rules and regulations.

In fulfilling these external requirements, we have had to introduce our own internal rules and regulations, and this endangers the informal and relaxed culture at HSE - that freedom which has attracted many creative and active people. Horizontal, informal connections, which play a very important role in academic development and which set our university apart from bureaucratic organizations, now tend to be, in my opinion, localized at the departmental level. In order to maintain HSE’s corporate culture, it’s very important to develop and support academic self-government. This means including the educational and scientific departments in decision-making processes.