THE KNOWLEDGE-BASED ECONOMY AND INNOVATION POLICY IN KAZAKHSTAN: LOOKING AT KEY PRACTICAL PROBLEMS.

Author:Saiymova, Meiramkul
Position:Report
 
FREE EXCERPT

INTRODUCTION

Nowadays Kazakhstan has an emerging economy and is considered as a newly industrialised country. The economy of Kazakhstan depends on exports-exports account for 75% of GDP (World Bank, 2016). In terms of GDP growth, Kazakhstan ranks second in the former Soviet Union countries after the Russia. Kazakhstan' GDP is two times larger than the GDP of four countries combined (Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan). The oil and gas sector are the main resource for the GDP structure and country suffers from the "Dutch disease' (Kutan & Wyzan, 2005; Karatayev & Clarke, 2016a; Cotella et al., 2016). The fiscal position of government is sound, driven by strong revenues from the oil & gas sector and a growing economy. The creation of the National Fund to save revenues from natural resource exports has been an important positive step for two moments: Monetary conditions are stable, with inflation down to single digits; Interventions by the central bank have kept the appreciation of the exchange rate at a modest pace. However, due to its high reliance on income from oil exports, the Kazakhstani economy and its competitiveness are vulnerable to changes in international commodity prices. Dependency on natural resource prices also increases the volatility of the overall economy and government's fiscal position (Karatayev et al., 2016b). In such oil and gas dependence environment, the contribution of innovation sector is neglectable. According to OECD, Kazakhstani level of innovative activity is 3.9% and this level is behind of former Soviet Union countries such as Belarus (the innovative activity was 19.6%) and Russia (9.9%) and significantly lower compare to OECD developed countries, for example, Germany (70%), Canada (65%), Belgium (60%), Ireland, Denmark, Finland (55-57%), as well as Central and Eastern European countries, where this indicator is in the range of 20-40% (OECD, 2017). There are a large number of studies demonstrating the impact and links between economic growth and innovative development (Lundvall et al., 2011; Fagerberg et al. 2012; Fagerberg et al. 2015). The economic success of OECD developed countries demonstrates that the innovation sectors contribute about up to 60-70% of GDP growth (OECD, 2017). The current priority for Kazakhstan is to build a knowledge-based economy and ensure the competitiveness of national economy at the global level in order to become one of the 30 most developed countries in the world by 2050. Therefore, Kazakhstan has taken many practical steps in the industrial innovation policy area to minimise impact of global oil prices fluctuations on national economy. Innovative policy is an important element of national economic development and it involves the use of certain tools, strategies and policy measures (Godin, 2009: 2014). The systemic approach theory maintains that innovation happens when all of the prerequisite conditions are present (Hall & Lofgren, 2017). Government has the important role of creating and maintaining these positive conditions (Patanakul & Pinto, 2014; Gok & Edler, 2015). The role of public institutions is to minimise uncertainties in the innovation process and to encourage innovation activities (Clark, 2002; Borras & Edquist, 2013). In terms of policy for innovation development, Kazakhstan has adopted strategies such as the Kazakhstan 2030 and the Kazakhstan 2050 strategies (Sayimova et al., 2017; Karatayev et al., 2017a). Both strategies state that the country is aiming to diversify the economy, which means that in the next decades, the country's economy will be based on innovative technologies and it will depend less on revenue from the exports of oil, gas and raw materials. At the same time, innovation and innovation policy itself is a new element in the economic development of Kazakhstan, where different institutions, public programmes and stakeholders are involved. Even though Kazakhstan has implemented a few strategies and programmes aimed at the development of science and technology, Kazakhstan faces several difficulties with establishing a comprehensive National Innovation System. Therefore, this paper aims to examine the three main practical problems that Kazakhstan faces with the implementation of the innovation policy. Previous research in Kazakhstan has examined some organisational problems associate with innovation sector from "big picture" (e.g., Smirnova, 2014; Aubakirova, 2015; Yessengeldin et al., 2015; Abazov & Salimov, 2016; Doskaliyeva et al., 2016). However, there is little information on financial issue, human resource potential and institutional framework. The paper applies the concept of National Innovation System Framework to examine three main practical problems for innovation sector development in the context of the "Dutch disease'. The paper is mostly about practical aspect of innovation policy in unique case of resource-rich developing country. The analysis of the current innovation policy and regulation framework at a national level is an extremely important issue for the future successful innovation performance of Kazakhstan.

The paper is divided by four sections. The section one presents a general country introduction, introducing the drivers for innovation policy in Kazakhstan. The section two presents a discussion of the analytical framework for innovation policy in Kazakhstan, the National Innovation System Framework. The section three provides background information on the innovation policy in Kazakhstan, including strategic documents and state programmes on innovation policies. It contains a review of the aims and objectives of the state programmes and its current implementation. The section fourth examines the problematic aspects of current innovation policy in Kazakhstan. The final section provides conclusion and some recommendations for overcoming these problems.

METHODOLOGY

The concept of National Innovation System Framework is the process of integrating different objectives and actors (government, research organisations, universities, companies) that are interacted and linked with each other in the creation of scientific knowledge, innovations and technologies (Godin, 2009). Lundvall (1992, p. 2) defined the National Innovation System Framework as being "constituted by elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge". This approach suggests that innovation is systemic work, where public research institutions, universities, financial organisations, policy-making organisations, training institutions, technological support institutions, industry and others interact together (Adams et al., 2006; Bassett-Jones, 2005). The performance of this system depends on the actors and their links with each other. Based on this idea, national governments around the world try to strengthen university-industry linkages. Currently, the National Innovation System Framework covers all the main components of the innovation process, including organisational, social, political and economic factors. This concept is widely used by researchers and decision makers at multi-levels for analysis the national innovation policies (Godin, 2009). The methodology for this paper has thus been conducted with the adoption of the concept of National Innovation System Framework in case of Kazakhstan. In addition to the National Innovation System Framework, the review of literature has been conducted with the help of extensive secondary information, obtained from various sources including national programmes, strategic documents and recent legislative base: Law "On commercialization of the outcomes of scientific and technical activities'", Law " On protection of intellectual property rights", Law "On commercial code of the Republic of Kazakhstan", Law "On Science" and Law "On government support for industrial and innovation activities".

Policy Framework for Development of Innovation Sector

To improve its industrial and innovation policy, Kazakhstan has established a number of institutions to support innovation including R&D, universities...

To continue reading

FREE SIGN UP