Developing the National Software Market: Public Policy Alternatives

Abstract

Marina Doroshenko — Head, Department for Analytical Research, Institute for Statistical Studies and Economics of Knowledge, National Research University — Higher School of Economics.  E-mail: mdoroshenko@hse.ru Address: National Research University — Higher School of Economics, 20, Myasnitskaya str., Moscow, 101000, Russian Federation.

Kirill Skripkin — Lecturer, Faculty of Economics, Economic Informatics Department, Moscow State University. E-mail: k.skripkin@gmail.com Address: 1-46, Leninskiye Gory, GSP-1, Moscow, 119991, Russian Federation. 

Today governments in a range of countries, including Russia, consider the promotion of open source software as an important policy tool for the development of information technologies. Since 2010 in Russia, an initiative has been undertaken to establish a National Software Platform (a set of applications based on Open Source) which, it is presumed, will be compulsorily embedded into the system of public administration. The paper assesses the efficiency of government policy in the field of Open Source and provides recommendations for its improvement.

Analyzing the specifics of the software market, that is, comparing the strengths and weaknesses of the two main types of software — proprietary («closed»), and open — as well  as «extreme» types in regard to the latter (direct stimulation or complete disengagement of the government from regulating the users’ choice), the authors conclude that any extreme policy approach is hardly relevant to the considered field. One should take into account the development not only of the software, but also the whole complex of complementary assets that are factors in the economic impact of innovation. The joint work of suppliers and customers in introducing new technologies (co-invention) creates a synergy that is the key to the effective use of ICT in the economy and development of the sector as a whole. Therefore, protectionism (fostering manufacturers at the cost of limiting consumer choice) is fundamentally inconsistent with the specifics of the ICT industry, and the compulsory transition to the new type of software will lead to a significant loss in terms of «switching costs» and benefits of network effects. At the same time, the indirect measures, including information sharing and support for users of open standards, expands customer choice and reduces the costs of switching from one to another software type. It is these mechanisms that are not just compatible with the specifics of the market, but also allow maximum benefits, both for producers and consumers.