G.A. Andirzhanova
Doctor of Political Science,
K.N. Aydarkhanova
Candidate of Law,
B.K. Maksut
3rd year student of
Kazak National University
Almaty, Republic of Kazakhstan
COMPARATIVE ANALYSIS OF INDUSTRIAL POLICY
IMPLEMENTATION PRACTICES OF FOREIGN COUNTRIES
Occurrence
and formation of the national economy is one of the most significant events in
the life of each state. This, in turn, is closely related to the development of
a market economy.
Accelerating
processes of globalization require from national economies greater coherence
and efficiency in solving the problems of the economy in order to ensure its
competitiveness. This job is inherent in all national economies, it can be
solved only by the fact that there will be a high efficiency of public
administration based on a combination of various techniques required to manage
the economy.
To
ensure the effective functioning of the national economic system partially mean
next fact, that you are using a systematic approach in solving various
problems, because the national economy is developing and successfully operating
on the basis of the principles and laws of the system.
To take
appropriate action to overcome the created difficulties in economic
development, a number of scholars
adheres to this approach. For example, a well-known economist, Leont'ev,
describes a systematic approach: "In order to predict the development of
the economy, we need a systematic approach. The economy of each country is a
great system in which many different activities, different industries, and each
of them produce something "[1]. This statement shows the close
relationship between development actors and processes of the economic system.
Professor of Elmwood U.S. Institute, Frit of Capra points out that during
management of any social system - a company town, the country's economy - it is
necessary to seek the optimal ratio of the system parameters [1, p.12].
At the
present stage in the different countries have different models of a market
economy:
- Model
of social market economy - Sweden, Germany.
- A
model based on national economy type - Japan, South Korea.
- The
American model of development.
-
Kazakhstan's economic development model.
Worldexperienceshowsthat
a country may not be truly competitive, even if it has rich deposits of oil and
minerals. Opposite, quite competitive ecould be countries with high level of labor
costs – it is Germany, USA, Switzerland, as well as countries with cheap labor
- Malaysia, Singapore. In the equally competitive economies can be countries
virtually without natural resources - Japan.Improving the competitiveness of
domestic producers is now the main objective of industrial policy. Industrial
policy includes a wide range of state influence on the industry development,
its sectoral and regional structure, as well as business efficiency.
Letussee, howindustrialpolicyinfluencesoneconomicsofforeigncountries
(intermsofJapan, USA, ItalyandAustria).
From the
second half of the 80s the leaders of many industrialized countries started to
reduce direct subsidies for crisis industry sector, and vice versa began
actively support a number of perspective industry sectors.
In
60-90 years Japan's position in the global economyhas increased. It accounts
for more than one tenth of world GDP. The total amount of foreign assets in
Japan by the year 1995 exceeded $ 1 trillion. dollars, and now exceeds the
value of foreign assets of the United States. The share of Japan accounts for a
significant portion of world exports (from 15 to 40%) of such types of products
such as steel, ships, cars, TVs, VCRs, cameras, machine tools, operation,
components for electronic equipment and others [2].
Such a state
regulatory system formed in Japan that mostly determines the specifics of growth
characteristics of the Japanese economy and its structural rationality. In
50-70 years used various forms of regulation of economic processes, which were
initially very effective, but then later became slow them. Gradually it became
clear that while of its growth and increasing complexity of economic structures
it need to be more specific and precise in regulation of all processes. The
state reserves very important function - it is a macroeconomic management,
fiscal and tax policies, as well as creation of favorable conditions for the
functioning of market entities. State regulation
forms of economic processes in Japan began the privatization of state
enterprises, tax policy and the liberalization of the domestic market. The
government also is a mediator between national economies and international
market forces. It realizes the problem is not just the wide penetration of
national industries in the world market, but also helps their integration into
the structure of the global economy on the most suitable conditions for it.
Public finance acts as the main tool in development and adaptation of industry
and the economy change in external economic conditions.
In the
base of formation Concept and realization of Japan industrial policy laying
next principles:
1. Support
for national industrial capital to improve its efficiency and competitiveness.
2. Support
for high-tech industries that are the basis to increase productivity, income
and employment, i.e. economic growth in general. This approach provides an
overall restructuring at the lowest possible social cost.
3. Direct
view: providing countries economy with a high competitive ability not only in
the current period, but the long term. In
the U.S., unlike Japan, the leading role in the rationalization of industrial
structure and the industry in adaptation changing conditions, domestic and
world market given to private corporations.In the U.S., the influence of
foreign competition, the most susceptible to the automotive, steel,
electronics. Measures taken by the State in relation to the industry, are
usually limited in providing financial assistance to industries or introduction
of protectionist measures to shield certain industries from competition with
foreign enterprises. The implementation of this policy, as a rule, does not
lead to increased competitiveness of the industry, though gives some time for
restructuring and keeps the level of employment.
–
While the U.S. economy was in relative isolation from
the world market, economic growth rates were high, and the movement of capital
and labor from one industry to another happened relatively painless, need in
industrial policy was not felt. The results of the U.S. economy over the past
10-15 years have shown that it is facing serious structural problems, which
eventually manifested in the following results:
- Slow
growth in labor productivity;
- Lack
of capital for high-risk areas;
- Low
level of investment;
- Low
cost value for civilian R & D and technological works;
-
Problems in the organization of production;
- The
deterioration of the "quality" management structures;
-
Serious flaws in the "institutional infrastructure" [3].
To
promote industrial companies USA use different tools, such as:
- formation
of mechanism as use of state property;
- amortization
policy.
To
implement goals, the policy of economic growth and industrial policy should
decrease possibility to distort changes in the market as small as possible.
Until recently, the EU, as well as in Western Europe as a whole was carried out
structural policy, pursuing mainly aim to maintain or improve the existing
industrial structure. Examples include agriculture, coal, steel, shipbuilding
industry.
In
November 1990 the EU Commission in the "Industrial policy in an open and
competitive environment" document has formulated the following basic
principles:
-
European Union States Parties and the Community must ensure that the process to
the desired structural changes consistent with the requirements of the market
and competition, as provided for coordinated market conditions;
-
Special priority should be in the development of high-tech industries.
Achieving this goal should ensure that the so-called "horizontal
industrial policy" is not confined within narrow sectors and wearing a
comprehensive nature. In Article 130 Section 1 of the Maastricht Treaty refers
to the establishment of economic climate conducive to the manifestation of the
initiative of enterprises and cooperation between them, and use the full
features of industrial policy in such areas as innovation, research and
technical development;
-
Participation of the EU should be only complementary to national efforts and
fully comply with the objectives formulated by European industrial policy. In
the transitional experience of Western countries on the organization of public
sector management industry in Kazakhstan represents considerable interest [90].
The formation and
implementation of industrial policy in Italy is based on the number of state
holding companies such as IRI (Institute for Industrial Reconstruction) OEPF
(Office of equity participation and funding of the manufacturing industry) and
others.
The
organizational structure of state property management was first implemented by
IRI. The activities of public enterprises, their development strategy, adoption
of long-term plans and the allocation of development funds industry are
determined by ICEP (Interdepartmental Committee for Economic Planning). He also
is subject to Ministry of state involvement in the equity, responsible for the
implementation of directives ICEP through state financial holding companies,
the creation of new companies, buying and selling government treasury stock
corporations.
In the
jurisdiction of the Ministry of state participation in share capital are state
holding company, coordinating industrial policy, strategy and finance. They are
funded by the state, are exempt from the payment of interest on dividends under
study, have the right to issue bonds guaranteed by the state, with 65% annual
profit is transferred to the national treasury.
The
state industrial policy in Austria is formed and implemented as part of overall
government economic policy [3, p.56].
It
should be noted that during the development of the state industrial policy,
Austria has moved away from sectoral principle of direct financial support to
industry and government interference in their activities. This was associated
with a number of reasons for this high cost, low efficiency, the structural
imbalance. By the way, at the same time, it was concluded that there is no need
to maintain unprofitable, unpromising enterprise, and it is better to replace
them to imported products.
Industrial
policy of Austria is characterized by the fact that the legislature way create
and provide the mechanism of activity of industrial enterprises in market
conditions. It also provides favorable treatment to investments of domestic and
foreign private capital in scientific and industrial research and development
activities, as well as high-tech and high-tech industry. An important role for
public funding and stimulate business investment is a system of special
investment funds generated by income from the state budget, sale of shares in
state enterprises, attracting free funds of the Austrian National Bank, etc. In
particular, in Austria, set up and successfully operate a variety of economic
development funds .
Important
part of the state industrial policy shows a direction as the simplification and
optimization of taxation of enterprises.
A key
element of industrial policy is to promote the competitiveness of Austrian
goods production, this is achieved by improving the quality while reducing cost
of production.
In
Austria, there is no single central state agency dealing with issues of
industrial policy - part of the functions vested in the Federal Ministry of
Economy, Science and Transportation, Finance and the House of employees and the
Austrian Federal Economic Chamber in the industrial sector unions.
In general, the
comparative analysis of industrial policy above states led to the conclusion
that it is necessary to take decisive measures for the sustainable political
and socio-economic growth in these countries:
In the
economic sphere:
1. Formation of reproductive branches that
satisfy the vital needs of the people.
2. The
regular increase in the affordability of the population.
3. The use
of scientific and technical programs.
4. The
development of competition.
5. The protection
and promotion of private property enterprises by state
6. Preserving
economic freedom.
7. The
development of private and mixed ownership.
In the
area of policy:
1) The
creation of a stable legal environment, the protection of the competitive
environment, guaranteeing property rights, freedom of economic decision-making;
2) Measures
of financing the budget, tax system, monetary policy and, thanks to the state direct
market processes in the right direction;
3) Creating
the necessary competitive environment, this can be achieved the system of
measures of state support and stimulate the effective demand of potential
consumers;
4) Development
of a national export program, improving the competitiveness of domestic
producers.
In the social
sphere:
1. The
implementation of measures on social protection of population, especially the
poor.
2. The
protection and promotion of state enterprises to private property.
3. Regulation
of unemployment.
4. Ensuring
economic development in the social area.
After the collapse
of the colonial system in the world in 40-50 years of the twentieth century
there were a fairly large number of newly independent states. Basically we are
talking about the countries of the Afro-Asian region. It is this group of
states called "free countries". Later they began to be read in
conjunction with Latin American states which had gained much political
independence. The individual young states of Asia and Africa had belonged to a
group of socialist-oriented countries, but most of the newly independent
countries in the recent past as well as many Latin American countries are
developing within the system of market relations. However, in the global system
of market economy is a further strengthening of the uneven economic development
of individual countries and regions. In this regard, an objective process is a
further deepening of economic, political and social differentiation in the
developing world. Based on existing literature in modern approaches to the
typology of developing countries, in our view, they can be divided as follows:
"Newly
industrializing countries" - NIS.
1. Countries
with low levels of economic development.
2. Least
developed countries - the poorest countries in the world.
Newly
industrialized countries are different now with faster economic growth than
many industrialized countries. These include states as South Korea, Taiwan,
Hong Kong, Singapore, Malaysia, Thailand, Argentina, Brazil, and Mexico. Analysts
say that the development of "newly industrialized countries" began
and continues within the world market system. At the same time due to a number
of factors in the NIS were of special economic and political interests of major
powers, which were sent to these countries for almost half of all financial
resources available to developing countries. As a result, already in the 70s
and 80s of this century for their economies were characterized by relatively
high rates of economic growth, which significantly exceeded the performance of
most developing countries and, especially, the industrialized countries. Before
the manifestation of the 1997-1998 major financial crises in the region of
Southeast Asia and later in the world, the Asian NIEs showed the highest level
of economic development in the world. In particular, South Korea became the
first developing country that in the early 60s has chosen a strategy of rapid
growth. Beginning in 1962, and until mid-90s, South Korea showed one of the
world's highest averages annual economic growth rate - 7.4%. This circumstance
has allowed it to increase such an important macroeconomic indicator such as
gross domestic product per capita, with about 70 U.S. dollars in 1954 to 10,548
U.S. dollars in 1996.
- Stage
1 - the end of the 50s - early 60s, during this period was carried out reform
of the agricultural sector;
- Stage
2 - in the mid 60's - early 70's were created by import-substituting
production;
- Stage
3 - from the mid 70s - and 80-ies began rapid development of industries that
were oriented to the production of export products;
- Stage
4 - from the mid 80s to the present time there is a gradual formation of its
own scientific and technological capabilities with a focus on the relevant
foreign resources.
For a
fast and successful development of its industry, South Korea has chosen sound
development strategy. As you know, until 1945, when there was a political and
economic liberation from Japan, the country there are only a few species of
national industrial production, it is indicative of the weakness of its
industrial base. Since the existing domestic market was limited, and South
Korea began to export production, which had priority development.
Industrialization began with the development of labor-intensive light and then
heavy industries.
In the late 80s
one of the fastest growing sectors of the South Korean were steel industry,
electronics, shipbuilding, automobiles. The production of motor vehicles has
been focused on the increasing demand both in own country and abroad. In
addition, an important place in the economy of South Korea won the
petrochemical industry, including oil refining, development of modern
industries in the national cement and glass, ceramics and footwear, flavoring
industries. Currently, almost all the leading RV industry sector was
manufacturing.
In
those countries, the manufacturing industry has a higher rate of growth of
labor productivity, especially in comparison with other developing countries,
and in a number of NICs, these figures can be compared with the industrialized
countries. In addition, many NIEs began the process of economic restructuring;
it is aimed by increasing the share of high technology products in the
industry. For example, high rates of economic growth in South Korea in the
first half of the 90s have been achieved due to the fact that began to increase
production and export of electronic and electrical industry, with steel to
increase investment in modernization and capacity expansion. This is ensured by
the fact that the NIEs increased spending on research and experimental
development (R & D).
At the
present stage in the economic development of the "newly industrialized
countries" have all the conditions for a more mature stage of development
of market relations. Thus, the process takes an active concentration of
production and capital, a merger of the banking and industrial capital and
forms a national financial capital. Currently, the activities of national
corporations are increasingly acquire international character, and in the most
advanced research vessel formed transnational corporations, which are on the
scale of its operations today, do not concede to many of the leading TNCs world
powers. If we look at sectors, the highest rates were in construction firms and
electronics industries. The rapid development of foreign investment due to the
fact that they have developed new technologies, there is ongoing support from
the state. In addition, such regional groupings such as ASEAN and APEC are
actively helping the flow of all this investment; ultimately, contribute to the
further globalization of business.
Thus,
the formation of a relatively advanced industrial base has allowed NIS to
effectively develop their external economic relations and, above all, export
and import contacts. In recent years the manufactures' of newly industrialized countries "is very
quickly gain prominence in the world markets because their products are highly
competitive. In this regard, the Asian NIEs occupy a leading position in the
prestigious world rankings. For example, in the mid 90s in the "top
five" most competitive countries entered the United States, Singapore,
Japan, Hong Kong and Germany. In general, for the "newly industrializing
countries," Asian pushes for farm development have become the growth and
diversification of international relations.
Latin
American countries have somewhat more modest results in its economic
development, because they found themselves in the role of suppliers of raw
materials on world markets. But gradually this begins the process of state
regulation and state involvement in economic life. Organized protection of the
domestic market contributed to the diversification of the national economy and
weakened the influence of external factors on it. To date, the privatization
process is almost completed in Chile, Mexico, Argentina and Peru, starting in
Uruguay, Ecuador and other countries. Latin America largely managed to overcome
the effects of a severe economic crisis of the early 80s and start rebuilding
the national economic and technological structures. Increased foreign trade,
capital flows began, increased social productivity. As the Latin American
experience, the strongest obstacle to the transformation of socio-economic
nature is the presence of a large foreign debt of the country. Reaching a
critical mass, it starts to limit the discretion of the state interferes with
the choice of their own development strategies. For example, privatization in
Paraguay, Bolivia, Panama and other countries began after the IMF has as its
terms of their credit deployment of the process of denationalization of the
economy.
At the
present stage more than ten countries in the region cannot pay interest to the
foreign debtor. To such States hard to build their economic policies. At the
present stage in Latin America there is a difficult period of comprehensive
structural reforms, which are characterized by an unconventional solution to
the economic, political, social, institutional and cultural problems. For the
successful promotion of reforms created some political background, primarily in
the form of democratic regimes in almost all countries.
Thus,
in general, the results of comparative analysis revealed a number of general
trends and specific features of the implementation of industrial policy,
typical for the western, eastern and Latin American countries.
The general global
trends, in our view, include:
1) The transition
from industrial to service and technology economy in developed countries;
2) globalization;
3) economic
liberalization;
4) increase in
global competition and regional integration;
5) the formation
of most of the GDP in the services sector, which have a scientific basis and
innovation;
6) the
concentration of intellectual resources and financial capital in developed countries;
7) The transfer of
industrial production, especially labor-intensive production to more backward
in the economic development countries of the world;
8) export
orientation of Latin American countries like Mexico and Brazil, the East Asian
countries - South Korea and Singapore. They went through the stages of import
substitution and export orientation. The peculiarity lies in the fact that East
Asian countries at some point abandoned the policy of import substitution and
switched to a policy of export promotion, while, in Latin America, maintained a
policy of import substitution. At the same time they created the industries
that were not based on real competitiveness, and built on the administrative
and tariff barriers. In the future, instead of upgrading and increasing the
productivity of these resources, they were directed at the industry's lobbying
across the state to further the conservation policy of import substitution. All
this eventually led to inefficient allocation of resources and the national
economy could not withstand international competition.
4. Trends in the
transit countries:
1. Inset the nation forces in the development of
the country.
2. Accounting of development features of all
regions and local districts in the state.
3. Average growth of economic development.
4.
Duration of transition periods at economic relations.
5. Formation of advanced structures of the
economy.
Specific
features include:
In Western
countries:
1. The high rate
of economic development.
2. Poor social
protection of population.
3. A large number
of unemployed.
In the East:
1. Formation of
advanced structures of the economy.
2. Out of the
crisis and turn to the sustainable economic development.
3. The formation
of a measures system aimed on greatest reduction in unemployment.
4. The influence
of ecology on human health.
1.
Nurdaulet Akhmetov, ‘Systems approach – methodological basis for an
effective model of the national economy’, Moscow 2003, p. 11.
2.
Renat Khasbulatov, ‘Global
economy’, Moscow 1994, p. 736.
3.
Nikolay Kondratiyev, ‘The
problems of economic dynamics’, Moscow 1995, p. 94