Development Strategy of the Republic of Kazakhstan

According to Decree of the President of the Republic of Kazakhstan dated May 17, 2003 the Strategy of Industrial and Innovation Development for 2003-2015 was adopted to ensure stable development of the country on the basis of diversification and modernization of the economy through creation of conditions for production of competitive products and export growth.

The Strategy has been developed by the Ministry of Economic Affairs and Budget planning of the Republic of Kazakhstan together with the Ministry of Industry and Trade, Ministry of Education and Science, Ministry of Transport and Communications, Ministry of Labour and Social Protection of Population, Ministry of Energy and Mineral Resources, Ministry of Finance of the Republic of Kazakhstan, Agency for Regulation of Natural Monopolies and Protection of Competition, National Bank.

The Strategy of Industrial and Innovation Development of the Republic of Kazakhstan is aimed at formation of national economic policy of the Republic up to 2015 and achievement of stable national development through diversification of various economic branches and changeover from extraction to processing.

Strategy is focused on:

• maintenance of average annual growth rate of processing industries within the range of 8-8.4%; at least 3 times gains in labor productivity by 2015 against 2000; and 2-fold reduction of power-intensity of GDP
• increased productivity of fixed assets of processing enterprises
• cultivation of business-friendly environment; establishment of institutional settings to stimulate private sector, encourage competitive edge and strive for greater value added
• introduction of incentives to establish science-intensive high-tech export-oriented enterprises
• diversification of export potential of the country in favor of products and services with high value added; transition to world standards of quality
• enhancement of integration into the regional and global economy, with participation in global innovation processes

The industrial and innovation policy is mainly focused on production of competitive and export-oriented goods, works and services in manufacturing sector and service sector.

The Government of Kazakhstan considers development of non-oil sector of economy an important aspect for successful implementation of the republican economic development strategy. In this respect, in 2004 the project aimed at diversification of Kazakhstan’s economy through development of non-extractive industries was launched in the Republic.

It is planned to create geographically localized groups of companies engaged in delivery of equipment, accessory parts and special purpose services as well as infrastructure, research institutes aimed at improvement of competitive ability of both separate industrial enterprises and the national economy in general.

Strategy of Industrial and Innovation Development of the Republic of Kazakhstan stipulates performing active state scientific and innovation policy. To achieve the set goals, further development of financial market and upgrading of fiscal, educational, antimonopoly and infrastructural policy are essential. According to the Strategy, all the branches of the national economy should see shifting to the most advanced global standards.

To resolve the issues and to achieve set-forth objectives and goals within the framework of the Strategy, the intensification of operations of the following institutions is proposed: the National Fund of the Republic of Kazakhstan, Development Bank of Kazakhstan, Investment Fund of Kazakhstan, National Innovation Fund, They are supposed to be the major tools of the Strategy implementation. The said institutes will be pursuing the policy of investment into establishment of new and development of existing enterprises with high value added and will be rendering support to R&D relying upon comprehensive analysis of promising sectors and enterprises.

Implementation of Strategy of Industrial and Innovation Development of the Republic of Kazakhstan is divided into 3 stages.

The first stage (2003-2005) saw amendments in legislature and branch-wise development programs, determination of volumes of financing allocated to science, education, and training of specialists. A number of development institutions have been founded to ensure public control over program implementation.

The second stage (2006-2010) involves study of private sector initiatives, search of investors, staff training, construction and reconstruction of main and supporting facilities.

The third stage (2011-2015), will complete the whole complex of organizational measures and accelerate works to enhance competitive edge of products manufactured by processing enterprises.

The main result of Program implementation, as viewed by the Strategy, is the change of economic structure and export diversification.

The total cost of Program for 2005-2015 will make up KZT 139,795,13 mln, inclusive of KZT 77,272.3 mln coming from the Republican budget and KZT 2,112 mln from the regional budget. Private local and foreign investments are expected to make up no less than KZT 60410.83 mln.

Active industrial and innovation policy will ensure rate of economic growth not less than 8,8-9,2% per year, which will subsequently result in GDP increase by approximately 3.5-3.8 times by 2015 compared to 2000.

According to expert evaluation, the Strategy implementation will allow to increase the share of knowledge-intensive and hi-tech manufacturing in GDP from 0.1% in 2000 to 1.4% in 2015.

For Kazakhstan innovative economy is a way to respond to system restrictions inhibiting economic growth by creating, introducing and commercializing new technologies at every managerial level. In the world of today, it is innovative economy based on borrowing, adoption to local situation and development of new technologies that can enhance national competitive ability leading to improvement of living standards of the population in this country.

Thus, efficient implementation of the Strategy of Industrial and Innovation Development will induce qualitative changes in the structure of Kazakhstan economy, resulting in its stable growth coming from efficient use of human, physical and natural capital, and leading the country to a new level of social development and social organization.