Shall we escape the "Dutch disease"?

[12:19] 31/03/2004, Amangeldy Kirtaev
http://engArticles.gazeta.kz/art.asp?aid=42855

Sceptics who were predicting "bright future" for Kazakhstan only in the nearest two or three decades, until our hydrocarbon resources are required on the world market, have lost.

It is the second year that the country is advancing in the industrialisation. The innovative business at last becomes tangible - there already are good beginnings and even better prospects.

The industrial-innovative development strategy becomes the republic's priority for the next few years.

The last week has become especially indicative in this respect. A reknown company "Hewlett-Packard" has come to the Kazakhstani market, inking a memorandum on co-operation in the project "Information Technology Park", developed under the patronage of "Engineering and technologies transfer centre" JSC of the Ministry of Industry and Commerce. Joint plans include studies in the area of information technologies, elaboration of recommendations on their use. Besides, "Hewlett-Packard" will directly participate in developing the information technology park.

Nearly at the same time another memorandum on mutual understanding and co-operation was inked. It is looks like fantasy, but the corporation "Microsoft" from now on will operate also in Kazakhstan. It is well-known that the software produced by this company is highly popular on the world computer market. "Microsoft", meeting the challenges of time today is extremely interested in making investments in the information infrastructure of developing countries. Here our interests do coincide: Kazakhstan needs developing innovative production.

These are but two facts that witness our wish to leave our raw material past behind and look into the future by means of the newest technologies.

However, there is also certain success. Development institutions have been created in the republic that already influence modernisation of processing industries.

The development bank already credits 20 investment projects for an amount exceeding half billion dollars. The innovation fund started to finance the first Kazakhstani space satellite that must be launched in the nearest two years. Finally petrochemical ventures resumed their work, Zinc plants in Balkhash, polyethylene pipe plant in Atyrau, the infrastructure of marine operations support on the Caspian Sea, Kostanai diesel plant have been commissioned. Many ventures of light and food industry are reconstructed and reequipped.

The development of chemical and petrochemical industries must be among priorities. Currently a gas refinery construction costing more than $1 billion is prepared on Karachaganak field. Also information technologies, metallurgy, biotechnology, space and nuclear technologies have been defined as chief directions. The country's infrastructure development is a mandatory condition.

At the current stage of human development there are virtually no types of economic activities that can do without using information technologies.

Their demand will keep growing in the future as well. The development of IT industry is provided by the sales of software and services. The IT world market growth has the highest speed among other sectors. During one year the world costs were growing by more than 10 per cent, which is higher than the speed of world economy growth. During the last few years the employment in it has grown by 50 per cent.

Quite recently foreign specialists spoke about syndromes of the "Dutch disease" in the republic - when there is a lot of oil, little attention is paid to other industrial areas. But already now the government is ready to invest big amounts in the innovative programmes. Demonopolisation and liberalisation already started in the railway, telecommunications, and electric power. Conditions for healthy competitiveness are being created, with which the necessity for innovation technologies will grow. The medium and small businesses are supported. Practical measures on the protection of intellectual property have been undertaken.

"The innovative production, lacking today, must receive tax preferences in order to be started and we must require from them efficiency or tax payments since the moment, when the production is started and brings profits, not when they are just beginning their work," - the president declared recently.

However, the system of tax benefits and preferences for hi-tech areas has already been established. Conditions for developing innovative and industrial economy exist. For foreign investors, who will want to participate in the programme of industrial development of Kazakhstan, most likely, the tax on corporate profit and the land tax will be abolished. Exclusive benefits will be provided for the technology parks. Currently four such parks are being built up: there will be an information technology park in Alatau village, Almaty oblast, a nuclear technology park - in Kurchatov, a biotechnology park - in Stepnogorsk, a communication park - in Priozersk.

However, we are a little too dizzy because of our achievements. Without a detailed calculation of economic profits there is a danger that state subsidies can be directed towards the support of economically inefficient production facilities.

That is why science must be supported in the first turn. The republic needs promising, breakthrough scientific and technological projects. It is necessary to introduce advanced foreign "know how", but licenses and equipment cost quite a lot, while the national science is in lamentable condition. During the independence years every second specialist left the scientific work. Research institutes were being either closed or almost not financed at all, so the science could not bear the desired fruit. Financing of the scientific activities lately make only 0.2 per cent of the GDP, while the share of scientific and scientific innovative services is miserable.

To receive a full return from the scientists, constant attention on the part of the state and additional financing are needed. It is exactly in the scientific institutions that priceless experience is achieved, highly qualified personnel are trained and authoritative scientists are transmitting their knowledge. There are some talented brains in our state, as well as efficient ideas and even fantastic projects. Many experts believe that Kazkahstan should invest in fundamental and practical studies.

Scientists from the Institute of catalysis and electro-chemistry named after D.V. Sokolskiy, National Academy of RK created a polyfunctional catalyser, which will allow to produce petrol and diesel fuel complying with international ecological standards on oil refineries.

The scientists were applying to many authorities with a proposal to use the discovery on national ventures. But they were not answered and then the institute introduced it in China earning 500 thousand USD for the license. Now high quality fuel is produced there, while in Kazakhstan they only start thinking about prioritising the petrochemical industry…

Besides, highly qualified and professional specialists are required for high precision and science intensive production facilities. We still lack them. There are only declarations that the perfection of education system will be carried out with innovative orientation taken into account, that special emphasis will be put on training of new formation managers capable of developing the innovation business.

Of course, Rome was not built in one day and Kazakhstan is unlikely to become an innovative country very soon. But here a complex approach is required. Only in this case our country will become a new Asian dragon.