Governmental program on accelerated industrial-innovative development of the republic of Kazakhstan as a key to improving the economic situation in the post-crisis period
Table of contents: The Kazakh-American Free University Academic Journal №1 - 2010
Author: Kurmangaliyeva Aizhana, Kazakh-American Free University, Kazakhstan
Governmental Program on Accelerated
Industrial - innovative development of the Republic of Kazakhstan (hereinafter
- the Program) was developed in response to the request of the President of the
Republic of Kazakhstan on May 15, 2009.
The program is aimed at ensuring
sustainable and balanced economic growth by diversifying and increasing its
competitiveness. The program is a logical continuation of the Policy of
economic diversification, and has integrated the basic approaches of the
Strategy of Industrial and Innovation Development for 2003-2015, the Program
"30 Corporate Leaders of Kazakhstan", as well as other policy
instruments in the field of industrialization.
For the period until the year 2015 the main
priority of the forced industrialization will be the implementation of major
investment projects in the traditional export sectors, with the multiplication
of new business opportunities for small and medium-sized businesses through the
purposeful development of Kazakh content, subsequent conversion and processing.
National Wellfare Fund
"SamrukKazyna", fuel, energetic and metallurgical companies, as well
as foreign strategic investors will become the initiators in promoting national
The Government will support the initiative
of Kazakhstan's small and medium businesses in order to transfer advanced
technology, attract foreign investors and build modern import-substituting
industries, aimed at developing their orientation on export.
In order to build the foundations of
post-industrial economy, the development of the national innovation
infrastructure and supporting scientific and technological entry points that
can be commercialized is planned to be continued. In general, governmental
support of economic diversification will be implemented through the
implementation of systematic measures of economic policy at the macro and
sectoral levels, as well as selective support measures for specific sectors and
Systemic measures of economic policy will
focus on the creation of a conducive macro environment and investment climate,
measures to improve productivity and competitiveness of the national economy.
Selective measures will be implemented
through a combined package of financial and nonfinancial support to priority
sectors and projects.
The government will systematically build
its interaction with business through the formation of effective institutions
of cooperation, both at the national and regional levels.
Adequate to the condition of economic
policy, the trajectory of industrialization by 2015 will have an internal
consistency with the resource, infrastructure, institutional and technological
The systemic nature of the mechanisms
built-in the Program that encourage diversification and technological upgrading
of the economy, will provide:
- enabling macroeconomic environment;
- improving business climate and encouragin
- massive technological upgrading and
development of the national innovation system;
- improvement of the human capital quality.
Concentration of resources of state and
business on the development of priority sectors will be accompanied by an
interactive process of congruence of government and business solutions, using
modern information systems for monitoring and implementation of specific
When analyzing the current situation, we
can mention what was implemented during past few years. The policy of
Industrial and Innovation Development, chosen in early 2000, strategically
identified the main risks of Kazakhstan's economy: the chosen way was
concentrated on economy diversification and moving its away from raw-materials
During this period, the following basic
institutional foundations of industrialization were created:
- the National Fund that provides stability
of the economy;
- National Welfare Fund
"SamrukKazyna" that consolidates state capacity to implement
- development institutions, accompanying
the process of diversification;
- interactive platform for interaction and
coordination between state and business.
As a part of the investment policy the
improvement of the legislative framework that defines the legal and economic
framework for investment promotion has been evident. These measures helped to
ensure adequate growth of the non-oil sector of the economy, provide conditions
for the further establishment of small and medium businesses in the period of
active growth associated with an increase in oil and gas sector. Although some
outstanding results were achieved, the policy of diversification and innovation
development has not been fully realized due to the presence of a number of
systemic effects, objectively inherent in the resource economics emerging
- symptoms of "Dutch disease" of the
economy, contributing to the reproduction of the effect of redistribution of
resources (investment, employment) in the commodity sector;
- market mechanism in this period was
unable to give the signals to prevent "overheating" of certain
sectors and could not help the state build a "correct" structure of
- policy of diversification faced the lack
of the necessary critical mass for its promotion.
The scale of the emitted public investments
for diversification were insufficient and scattered, which could not lead to
any serious structural changes. As a result, the economy kept its focus on raw
materials, and the employment structure can be characterized by low efficiency
of labor potential. In 2008, when employment in agriculture was 31,5% of the
population, the share of this sector in the GDP amounted to only 5,8%. During
the period from 2000 to 2008 the share of manufacturing in GDP has declined from
16,5% to 11,8%, while the share of mining has increased from 13% to 18,7%.
The extensive nature of the development of
Kazakhstan's largest businesses that are oriented towards a quick profit from
the export of raw materials, did not allow switching to higher conversion
stages and the domestic market in the changing world market conditions.
Initiatives of the Government did not
receive an adequate support of the business community, as a young national
business has not fully grown to the extent to become an active player in the
diversification and to build a new, innovative business in Kazakhstan, to break
through and compete in the global market, attract global leading companies as
The specifics of Kazakhstan’s national
small and medium business are determined by its ability to occupy the vacant
niche, guaranteeing a fast return on investment (domestic non-tradable sector
of the economy: real estate, trade, the local construction industry, trade,
mediation and service sectors).
Accordingly, the business priorities were
not correlated with the priorities of the government on the development of the
industries manufacturing goods with a high added value. These tendencies were
reflected in a corresponding portfolio of investment projects, in the
development institutes and banks. The crisis that took place in the past couple
of years has forced the national economy to look for new markets and
innovational products. The most optimal way to be chosen for a post-crisis
development is a forced industrialization.
International experience suggests different
approaches to industrialization: the strategy of "catching up",
"traditional specialization", "post-industrial development. Based
on the structure of Kazakhstan’s national economy, at this stage of development
the most appropriate strategy for industrialization of the economy of
Kazakhstan is the strategy of "traditional specialization” that is
commodity-based with a subsequent shift of primary production to higher
conversion stages. Today, as competition increases in emerging markets and it
is important to quickly seize the markets, both internal and external, maximize
and implement the potential of the Customs Union with an accessible market -
170 million people. In addition, the unique geographical position of Kazakhstan
makes it possible to carry out and win the position of an effective global
intermediary in Asia and the CIS (Russia, Central Asia, China, Iran, and
India). In order to expand available markets for the active presence of the
enterprises of the Republic of Kazakhstan it is necessary to provide an
intensive support for non-commodity exports of agriculture, textiles and
The main condition for successful
implementation of the industrial policy should become an increase in factor
productivity and competitiveness of national economy. The upcoming
industrialization will require transition from an even policy of regional
development to a point approach of urban development and areas with high growth
potential and high economic activity.
The effectiveness of the industrial policy
depends on the consolidation of efforts of business and government on the
development of priority sectors, as well as the development of effective
institutions and mechanisms of their interaction. For the coming period the
industrialization policy will focus on rapid development of non-extractive
industries sector through development of "traditional specialization”,
which will become catalysts for industrial innovation processes.
The Government’s efforts will focus on
developing the following priority sectors:
- traditional: oil and gas, mining and
smelting complex, nuclear and chemical industries with the subsequent
transition of primary production to higher stages;
- based on the demand for subsoil users,
domestic companies and the state: engineering, construction industry,
- production of a non-commodity sector that
is focused mainly on the export, that are: agro-industry, light industry,
- sectors of the “Economy of the Future”,
which will play a dominant role in the global economy over the next 15-20
years: information and communication technology, biotechnology, alternative
energy, space activities.
The list of these sectors is not exhaustive
and will be supplemented in the implementation of the Program.
In the process of diversifying the economy,
the state will oppose the implementation of inefficient projects, so the main
criteria for selecting projects for support will be the productivity,
efficiency and export orientation, associated primarily with the possibility of
realizing the potential of the Customs Union.
When implementing the Program, the support
of the industries with export potential is an issue of a great importance. Tourism
is one of the industries that has a big potential for development in the
framework of the Program. In recent years, the positive dynamics of development
of tourist industry of the country could be generally observed: in 2008, the
total number of visitors compared to the year 2007 increased by 3,1%, the
volume of domestic tourism grew by 8,2%, outbound tourism grew by 15.3% . The
investments in the development of tourist facilities increased from 47 billion
tenge in 2005 to 97 billion tenge in 2007 and in the year 2008 this figure rose
to 129.3 billion tenge.
One of the factors that led to the
reduction of the number of tourists entering the Republic of Kazakhstan was a
low attractiveness of the tourist industry’s objects because of their moral
deterioration and the lack of infrastructure. A small number of placements in
line with world standards leads to underutilization of capacity to provide a
full range of services to incoming tourists, and as a consequence a
comparatively low level of economic returns. Efforts to create a tourist image
of Kazakhstan and the promotion of national tourism products to the world
market were undertaken. For these purposes, provided the participation of
Kazakhstan in the largest international tourism exhibitions in Madrid, Berlin,
Beijing, Seoul, Tokyo and London was provided. In the framework of the Program,
the main task for the economy in this sector is to improve the competitiveness
of the tourism industry and the attractiveness of Kazakhstan as a tourist
destination. The targets will be to increase the total income of organizations
providing services in the field of tourism activity by 2015 by no less than 12%
of the level of 2008.
The industry development will be directed
at the creation of competitive infrastructure of the tourism industry, the
formation of national tourist products, promotion of domestic and international
As a part of a competitive tourism
infrastructure the following questions are planned to be worked out:
- allocation of land by local executive
bodies for the construction of roadside infrastructure along the transport
- establishment of engineering and
communication infrastructure in the newly created objects of the tourism
- developing a model of a project
construction of roadside infrastructure;
- funding interest rates for financing the
investment projects of national tourism cluster along the transport corridor
“Western Europe - Western China ".
The tourist industry needs to be provided
with a high-qualified human resources. Staffing requirements for the tourism
industry for 14 qualifications will be met through training in universities and
77 specialized schools and colleges. The conditions for improving the quality
of education in tourism major will be created by auditing a public university
for certification the quality of tourism education «UNWTO-TedQual» and the
development of professional standards in the tourism industry.
In order to promote the competition at the
market of providing services for tourists, the following measures will be
- ensuring the establishment of legislative
conditions for the consolidation of tourist operators;
- establishing the centers of tourist
information in the regions with the potential to develop a tourist sector.
Developing the sectors of the “Economy of
the Future” also has a very important meaning to the Program on accelerated
Large-scale introduction of information and
communication technology (hereinafter - ICT) is a prerequisite for increasing
productivity and creating conditions for the integration of domestic
enterprises in the global economy.
The growing demand of business and
population for telecommunication services has led to a significant increase in
revenues of telecommunications operators. According to preliminary results of
2009, revenues from the provision of telecommunication services amounted to 430
billion tenge, or 7.5% higher compared to 2008.
The most dynamically developing service is
providing Internet access (an increase of 22% in the year 2009 compared to the
year 2008), local telephone connection services (19%) and the mobile segment
(9%). The greatest growth was possible due to the development of backbone
networks of fiber-optic communication Kazakhstan’s operators and the unique
geographical location of the country.
In order to maintain high growth and
accelerate the development of the ICT sector in the Republic of Kazakhstan it
is necessary to solve a number of existing problems:
- administrative barriers for companies
working in the field of information technology (imperfect customs clearance
procedures and registration of information products);
- low percentage of "local
content" in the purchase made by public institutions and companies with
state share that are related to information technology;
- issue of personnel recruitment in ICT
- low investment activity in attracting
venture capital for financing innovations.
In the ICT sector the Republic of
Kazakhstan is planning to develop the following areas:
- improving the system of “electronic
- creating a communication infrastructure
for information exchange within the Customs Union;
- installing electronic services, including
the services in the sector of social security, health, transport and
communications sector and in agriculture.
In the educational field it is planned to
double the number of state grants for studying for information communication
major compared to the number of such government scholarships in the year 2009. The
educational programs for these majors are planned to be modified in compliance
with the international standards of education.
Successful implementation of the Program on
accelerated industrial-innovative development will contribute to sustainable
and balanced growth through its diversification and increasing competitiveness
in the long run. The main qualitative results of the program will be:
- the increase of production factors in an
- developing and strengthening the national
- reducing the concentration of the economy
and the role of small and medium enterprises in the industrialization process;
- efficient organization of the productive
forces of industrial sectors,
- the growth of human capital.
1. The Message of the President of the Republic of Kazakhstan “New decade - new economic growth - new opportunities for Kazakhstan” from January 29, 2010.
2. The Message of the President of the Republic of Kazakhstan “From crisis to renovation and development” from March 6, 2009.
3. “Governmental Program on Accelerated
Industrial-innovative development of the Republic of Kazakhstan for the years
2010-2014” from May 15, 2009.
4. The Report of the Government of the Republic of Kazakhstan on the results of social and economic development of the country
over the year 2009.
Table of contents: The Kazakh-American Free University Academic Journal №1 - 2010