TECHNICAL NOTES

Экономические науки/14. Экономическая теория.

PhD candidate Algiev S.K.

Kazakh British Technical University

Moving Toward Knowledge-Based Economy: Kazakhstan experience.

Кандидат на степень PhD Алгиев С. К.

Казахстанско - Британский технический университет, Казахстан.

Продвижение к наукоемкой экономике: Казахстанский опыт.

Abstract

To succeed in this increasingly competitive and global economy, countries must transform effectively into knowledge-based economies (KBE) that would close the gap between more advanced countries and developing economies. In order to reach this goal the countries have to have advanced information and communication technology infrastructure, a highly educated workforce, dynamic research and innovation programs, and supportive regulatory environment. This article reviews existing Kazakhstan’s indicators with respect to innovation systems initiatives which are one of the four dimensions of KBE.

INTRODUCTION

The global economy is changing, and along with it, the landscape of economies in Central Asia. Worldwide trend that started in the early 20th century continues to hold, namely, increasingly greater value is being created by national economies from services than from industry or agriculture. Kazakhstan’s government recognizes the need to diversify the economy and create wealth of the nation through application of human knowledge and creativity which would steadily outpace wealth creation through extraction and processing of natural resources. Knowledge, as embodied in human being (as human capital) and in technology, has always been central to economic development. This paper thus aims at reviewing the existing frameworks on KBE established by different international organizations with a view to drawing up an appropriate framework for Kazakhstan.

THE PILLARS OF THE KNOWLEDGE-BASED ECONOMY: AN OVERVIEW

To help understand the degree to which an economy is a KBE, relevant statistical indicators have to be constructed. Unfortunately, there is so far no internationally agreed framework for measuring a KBE. The issues and challenges in developing KBE indicators would also be discussed. The World Bank proposed a widely used KBE model that identifies the four pillars of the KBE:

1. Education for a skilled workforce;

2. Science and technology, and innovation;

3. ICT infrastructure; and

4. Policy and regulatory environment.

Similarly, the Organization for Economic Co-operation and Development (OECD) policy framework for KBE embraces three policy areas:

1. ICT including communication infrastructure and e-business;

2. Science, technology, and innovation;

3. Skills, education, and knowledge-based employment.

The first three core dimensions (innovation, information and communications technology (ICT) and human capital) are the factors that have been found to significantly influence national factor productivities. Accordingly, the World Bank had developed statistics for Central Asian countries consisting of indicators along each of the four pillars. The characteristics and published indicators are outlined below for each of these dimensions.

Figure 1: Knowledge-Based Economy Indicators for the Central Asian Region

Source: World Bank, Knowledge Assessment Methodology. Available: web.worldbank.org/WBSITE/EXTERNAL/WBI/WBIPROGRAMS/KFDLP/EXTUNIKAM/0,,menuPK:1414738~pagePK:64168427~piPK:64168435~theSitePK:1414721,00.html

The innovation dimension includes the support for, and performance of, innovative activities within the economy. Here are some indicators presented for innovation sector of Kazakhstan:

1) Innovation Activity level:

From the activity level figure 2 shown below it can be concluded that there was a fall in 2008 in innovation funding due to financial crisis hit all countries. After year 2008, there is an increase in innovation activities due to fast recovery from the crisis.

Figure 2: Activity level in innovation sector in Kazakhstan. (Source: Bureau of Statistics of Republic of Kazakhstan; www.stat.kz)

2) Companies Innovation Activity level:

From the activity level figure 3 shown below it can be concluded that the highest innovation activity level among the companies is in Western Kazakhstan region due high oil gas industry activity level in the region. Other factors that affect the activity are the regional innovation incentives and special programs for local content development.

Figure 3: Companies activity level in innovation for different regions of Kazakhstan. (Source: Bureau of Statistics of Republic of Kazakhstan; www.stat.kz)

Regions: 1-Akmolisnk; 2- Aktyubinsk; 3- Almaty; 4- Atyrau; 5- Eastern Kazakhstan; 6- Zhambyl; 7- Western Kazakhstan; 8- Karagandy; 9- Kostanai; 10- Kyzylorda; 11- Mangistau; 12- Pavlodar; 13- North Kazakhstan; 14- Southern Kazakhstan; 15- Astana city; 16- Almaty city.

3) Innovative product profile:

This indicator shows the pattern of the innovative product that has been produced though last eight years in Kazakhstan. From the figure 4 shown below it can be concluded that new innovation products constantly rising till 2011 with a small drop in 2011. However, the number of innovative products that undergo small changes and other minor innovative products was produced are constantly decreasing. The overall trend for innovative products is promising and there still a lot of work to be completed.

Figure 4: Innovative product profile. (Source: Bureau of Statistics of Republic of Kazakhstan; www.stat.kz)

4) Funding profiles for technological innovations:

This indicator shows funding types for innovative product that has been recorded though last eight years in Kazakhstan. Figure 5 shows inconsistent pattern for innovative funding due to different numbers each year. The statistics for last year, 2011, shows increase in foreign investments, government funding and R&D institutions budget increase for innovation. As a result of above increases in investments, it can be concluded that there is a decrease in company own investment in 2011.

Figure 5: Funding profiles for technological innovations. (Source: Bureau of Statistics of Republic of Kazakhstan; www.stat.kz)

Conclusion

Nowadays knowledge has increasingly become an important means for value creation and national economies are becoming more knowledge-based—economies where productivity and growth have become more dependent on knowledge. It can be noted, though, both academicians as well as practitioners—would today still characterize the KBE as a largely theoretical concept for economic growth and wealth creation. This is believed to be the case due to the absence of a common—globally understood and accepted—framework for the KBE and a set of measurable models and indicators for successful performance. As it was mentioned earlier in this article, there are frameworks for KBE stated by leading economic institutions like World Bank Institute (WBI) and OECD.

Different sets of innovation indicators have been selected from the National Bureau of Statistics of Kazakhstan and presented accordingly. From the statistics presented it can be concluded that overall trend in innovation development is promising. Further studies can be implemented in the other three pillars of KBE (Information and Communication Technology (ICT), Human Capital development and Regulatory).

REFERENCES

Abramowitz, Moses. 1989. Thinking about Growth. Cambridge: Cambridge University Press. Quoted in the Organisation for Economic Co-operation and Development (OECD). 1996 TheKnowledge-Based Economy. Paris.

Asian Development Bank (ADB). 2006.

Chen, Derek H.C., and Carl J. Dahlman. 2004. Knowledge and Development, a Cross-Section Approach. World Bank Policy Research Working Paper 3366. Washington, DC. August.

Dahlman, Carl. 2002. Knowledge for Development, Assessment Framework and Benchmarking. Singapore.