Foreign Policy Research Institute A Nation Must Think Before it Acts How Belarus’ Soviet Past Led to its Modern-Day IT Success
How Belarus’ Soviet Past Led to its Modern-Day IT Success

How Belarus’ Soviet Past Led to its Modern-Day IT Success

Following a February 2020 visit to Minsk, an inspired Secretary of State Mike Pompeo tweeted his optimism regarding the “extraordinary growth potential” of Belarus’ Hi-Tech Park (HTP). A clearly impressed Pompeo was surprised to learn of the IT sector’s success in the country. The sector has been characterized by higher wages (upwards of 4x the average salary) and significant economic growth (IT contributed to 5.5% of gross domestic product in 2018, an increase of 4% since 2011). It has even stymied a portion of Belarus’ brain drain to Western markets and diversified the high-tech economy away from Russia. While the IT sector operates in an increasingly global market, political unrest in the wake of the contested 2020 Belarusian presidential election threatens to undermine its stability. If protests continue and political change remains a distant prospect, the success of the IT sector is in doubt.

What has enabled the IT sector’s success in a restricted and closed economic environment? Primarily a government-sponsored tax regime in which companies register as part of the Belarusian Hi-Tech Park and receive generous tax breaks in return, including a 0% rate on value-added tax, as well as on income, offshore, real estate, and land taxes. The HTP, founded in 2005, has grown to 750 companies, including Viber, maker of the popular messaging app, and, the company behind the video game World of Tanks. While the tax subsidies accelerated the growth of the IT economy in Belarus in the 2010s, the country’s strong vocational education system and history of high-tech industrial production laid the foundation on which the IT sector stands today.

The Belarusian Soviet Socialist Republic’s (BSSR) educational structure supported the success of the country’s industry until the collapse of the Soviet Union, providing a specialized workforce to the modern-day IT sector. Prior to the establishment of the Soviet Union, Belarus had very few higher education institutions. Recognizing the need for an educated workforce, the BSSR founded and grew a vocation-based education system focused on the specific needs of the Belarusian and greater Soviet economies. By 1941, the BSSR had 25 higher education institutions (only five existed prior to the revolution) and educated 21,500 students. This number steadily grew, and by the end of the Soviet Union, the BSSR had 188,600 students enrolled in 33 higher education institutions. The aforementioned vocation-based education system trained these students for work in Belarusian town factories or for specific technical professions in full support of the Soviet state, a legacy that built Belarus’ long-standing reputation as a high-tech economy.

To support the country’s thriving industrial tech sector, the Belarusian education system established technology-focused vocational universities such as the Minsk Radio Technical Institute (RTI), founded in 1964. Today, the IT sector and HTP employ graduates of many of these universities, including RTI, which in 1993 was renamed the Belarusian State University of Informatics and Radioelectronics (BSUIR). In 2016, BSUIR was one of the most popular universities for employment in the HTP. BSUIR, BSU, and other regional and national universities have consistently high enrollment levels as total tertiary education matriculation in Belarus was 87% in 2018. STEM education in these universities has further supported the IT sector in Belarus, and an estimated 22% of Belarusian graduates will specialize in STEM disciplines in 2025. The Belarusian education system is uniquely suited to support the IT sector and provides a highly educated workforce to companies with residence in the HTP.

The BSSR specialized in the research and development and assembly of high-tech products and manufactured technologies ranging from TV sets to microchips. By the late 1980s, more than 80% of Belarusian industrial output was exported to other Soviet republics or foreign countries (compared to 60% in other Soviet republics). The BSSR’s industrial economy was the epitome of Soviet industry and was widely considered the most technologically advanced republic in the USSR.

Although the Belarusian IT sector lost its primary customer after the fall of the USSR, it did not lose its capacity for high-tech development. According to a 2001 United Nations technological development index, Belarus had the ability, if properly utilized, to be a world leader in technological advancement. The founding of the HTP in 2005 mobilized Belarus’ dormant capacity for IT production. As a result, from 2005-2017, Belarus’ information, communication, and technology service exports as a percentage of total service exports increased from 4.98% to 18.41%. When Ernst and Young surveyed HTP residents for a 2017 report, service outsourcing was the most popular line of business for over 69% of respondents. Many HTP companies are also involved in the development of customized or proprietary technology products for both industry and consumer use. This includes World of Tanks and Viber as well as industry-focused product development solutions from companies like EPAM Systems. Furthermore, these products are being sold to an increasingly global market. In 2018, over 90% of HTP exports went to European Union member-states and the United States—a stark contrast from the rest of the economy, which is heavily dependent on Russia.

In an economy hampered by structural difficulties, Belarus’ IT sector has been a rare success. However, with the ongoing political crisis, the leaders of almost 300 IT companies in Belarus threatened to relocate their companies. Countries such as Poland, Lithuania, and Ukraine have even eased immigration restrictions to assist Belarusian IT specialists and companies with visa accessibility, local language training, and tax breaks. After the killing of an opposition protester in mid-November 2020 and continued human rights abuses, it seems unlikely that these specialists or their employers will return to Minsk in the near future.

The views expressed in this article are those of the authors alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.