PESD partners Katharine Gratwick, Rebecca Ghanadan and Anton Eberhard have completed a case study on the experience of IPPs in Tanzania. The latest report is in addition to the PESD run study, Experience with Independent Power Projects in Developing Countries, exploring the factors that explain the patterns in IPP investment, and the legal and institutional mechanisms that could make the IPP mode of investment more sustainable. The Management Program Infrastructure Reform & Regulation (MIR) team has also revised previous case studies on Kenya and Egypt.

A recent report from Duke University that critiques the supposed gap between the number of American science and engineering (S&E) graduates and those of merging economies -- especially China's -- has led to false reassurance that the U.S. lead in science and technology is not under threat from China. It would be a grave mistake to drop our concerns about China's competitive challenge.

First, the Duke report simply claimed that China's true number of science and engineering bachelor degrees was 351,000, rather than the widely reported 600,000. Coupling this with an upward adjustment for American graduates still left China producing 214,000 more such degrees than the United States.

Moreover, undergraduates are only part of the concern. China's production of those with doctorates has increased rapidly. By 2003, China's homegrown science and engineering doctorates numbered almost half of the U.S. total.

Chinese were also earning large numbers of doctorates abroad. In 2001, the number of Chinese S&E doctorates earned in Japan, the United Kingdom and the United States equaled 72 percent of the total of S&E doctorates earned by American citizens and permanent residents.

Since 1975, China has increased its global share of S&E doctorates from zero (courtesy of the Cultural Revolution) to 11 percent, not counting doctorates earned overseas. During the same three decades, the U.S. global share has fallen from half to roughly 22 percent.

More worrisome than the aggregate numbers is American universities' reliance on foreigners who earn doctorates. In engineering, foreigners account for over half of America's doctorates, and in computer science just under half.

If foreign-born holders of doctorates continued to stay in the United States, we wouldn't have to worry. Unfortunately, there are many signs that it is becoming much harder to retain them.

One need only look at the flow from Taiwan, one of the former main sources of American S&E doctoral degrees, to see what could happen. Up until 1994, Taiwanese earned more science and engineering doctorates in the United States than members of any other foreign nationality. By 2000, their numbers had plummeted because economic and educational opportunities at home were more appealing.

The Taiwanese didn't just stop coming to America. They also began to leave. As Taiwan's tech sector boomed in the 1990s, huge numbers of Taiwanese technologists (estimates range as high as 100,000) left America for home and took their technical skills with them.

Our two current biggest foreign sources of technologists, China and India, appear to be following Taiwan's path. China has begun to lure back large numbers of technologists. China's central and local governments offer free office space and other benefits to attract technologists home. These inducements are working. A 2005 survey of the Chinese American Semiconductor Professionals Association's members showed that the vast majority regard China as the most likely future work destination, and they rated Shanghai higher than even Silicon Valley on career potential. India's recruitment efforts have also started to bear fruit.

The challenge is not simply keeping up the numbers of technologists in America. China by many measures has improved its technological capabilities. On the Georgia Institute of Technology's Index of Technological Capability, China has more than doubled its index score over the past decade. China now ranks fourth behind the United States, Japan and Germany.

This rapid ascent is not surprising given China's increasing investments. China's research and development spending as a percentage of gross domestic product has tripled to 1.3 percent in the last decade, even while its GDP has ballooned. Few emerging economies spend even 1 percent of their GDP on research.

U.S. patents invented in China are also on the rise. Information-technology patents from corporations' Chinese technologists have risen from 134 in 1997-2001 to 482 during 2002-04. As a first step to meet this challenge, we should increase federal spending on basic and exploratory research. Our R&D spending has been flat at 2.6 percent of GDP for four decades, but the share of federal spending has declined from two-thirds to one-quarter.

Given that corporations now de-emphasize basic scientific research, the federal government should further support the basic research that could maintain our lead at the cutting edge of technology.

Increased federal funding would also address the issue of the falling share of investment in certain disciplines. With spending flat, the rising share commanded by biomedicine has meant a falling share spent on engineering and physics.

Federal support may also play a direct role in increasing interest in pursuing a science education. Since the 1950s, the number of undergraduate S&E majors in America has risen and fallen in line with federal research funding, as Professor Henry Rowen of Stanford University has pointed out.

Before meeting China's challenge, we first must recognize it. Complacency in reaction to "good'' news that China is producing fewer S&E graduates than commonly thought is not the answer.

Three months ago the Russian energy giant Gazprom forced Ukraine to pay sharply higher prices for natural gas. At the time, the story was portrayed as a political struggle for control in Kiev. But last week Gazprom announced it was tripling gas prices in Belarus, a country that is politically close to the Kremlin. Moldova has been forced to accept a doubling of prices over the next three to four years, and the other former Soviet republics are already paying market prices for Russian gas.

The truth is that these price increases are not political. Rather, they reflect worrisome economic and geological facts about Russian gas fields. The Kremlin is not simply trying to use Gazprom to reassert authority in Belarus, Ukraine or anywhere else. There are in fact deep problems with Gazprom -- problems created by its inefficient management and a looming decline in gas production.

Russia controls over a quarter of the world's gas reserves -- more than any other country. Most of the known Russian reserves (about 80 percent) are in west Siberia and concentrated in a handful of giant and super-giant gas fields. Since the early 1970s the rate of discovery for these new fields has been declining. Moreover, output from the country's mainstay super-giant fields is also steadily falling.

Huge investments are needed to replace this dwindling supply, and all the options for new production will prove costly and difficult. New fields in the far north and east of the country are distant from most of Russia's people and export markets, requiring wholly new transport systems such as pipelines. Moreover, most of these fields are found in extremely harsh environments where it is technically and financially difficult to operate.

Gazprom controls neither the capital nor the technology that will be needed. The state-controlled company is already deeply in debt and burdened by many expensive obligations, such as supplying Russia's population and friends with cheap gas. The company has to work with foreign partners.

So far Gazprom has been able to forestall crisis. Economic stagnation across the former Soviet Union and Eastern Europe since 1990 dampened gas demand. Russia, which had a surplus at the time, sharply increased its gas exports and made contractual commitments that will remain in force for many years.

But following the long stagnation, Russia's internal gas consumption is rising again as the economy expands. And new Russian policies to promote development of the country's eastern regions will, in the next few years, require large new commitments to supply gas to that region (along with spending on railroads, airports and other infrastructure).

Even when the Russian economy was in the doldrums the country was notable as a large gas consumer because of its extremely inefficient energy system. Today Russia is the world's second-largest gas user, after the United States, although its economy is only one-twentieth the size of the U.S. economy.

Electricity in Russia is produced for the most part by gas, but the country's gas-fired electric generators work at 33 percent efficiency on average, compared with 50 to 55 percent in Europe. More than 90 percent of residential and industrial gas consumers don't have meters. Gas is even cheaper than coal -- Russia is the only large country where that is true -- so incentives to switch to an abundant fuel are weak.

In recent years Russia has boosted gas supplies by squeezing Turkmenistan to sell gas to Russia at a deep discount. But Turkmen gas production is poised to decline, and Turkmenistan's gas industry is barely functional because the country's political environment is scary for long-term investors. Other Central Asian suppliers, notably Kazakhstan, are unlikely to be able to bridge the gap.

Caught between growing internal consumption of gas, continued inefficiency and mounting external obligations, Russia's gas industry faces a looming crisis. Given the country's vast resources, it seems that many producers could fill the void. But a series of policy decisions created two roadblocks that Gazprom has been happy to reinforce. One is the lack of access to the Gazprom-controlled pipeline network, which explains why few companies even bother to look for gas: They know they can't get what they find to market. The other barrier to investment is the low internal prices, which make gas production uneconomic except for companies that can sell their products outside.

Gazprom needs cash -- much more cash -- for investment. At the same time, it needs a strong incentive for former Soviet republics to cut their own very inefficient consumption.

Analysts have ignored the risk that Russia's supplies could fall short because they focus on Russia's vast gas resources and the new Western investors who are -- albeit cautiously -- entering into joint ventures with Gazprom. But those resources and ventures are for the long term, and the looming crisis of supply is unfolding now.

The gas shortage is likely to become most acute over the next few years. If there is an unusually cold winter in 2008, the year of Russia's presidential election, then Gazprom will face a politically unpleasant choice: whether to cut off internal customers (voters) or the Western customers who are the firm's main source of hard cash.

The writer is a research fellow at the Program on Energy and Sustainable Development at Stanford University. She is co-author of "Axis of Oil" and of a forthcoming comprehensive review of Russia's gas pipelines.