Information about the authors:
Avsinova Moldir Kuanywkyzy
Karatayev Dauren S’ezbekovich
Masters of the
department "Mathematics"
Country: Kazakhstan
City:
Almaty
University: Kazakh National Technical University named after K.I. Satpayev
Telephone: +77021727717; +77012116850
E-mail: avsinova.m@gmail.com
Scientific adviser:
Velyamov Turganzhan Tursunovich
Phd in Technical
Sciences, an associate professor of the «Mathematics»
department
Country: Kazakhstan
City:
Almaty
University: Kazakh National Technical University named after K.I. Satpayev
Telephone: +701 736 86 87
E-mail: fea_vel@mail.ru
Velyamov T.T., Avsinova M.K., Karatayev D.S.
Title of the article:
«From the effective economic policy to industrial - innovation policy
through the development of engineering education on the basis of mathematical
methods and models»
Keywords:
Economic policy,
industrial policy, economic - mathematical model
ABSTRACT
The problem of the
formation of competitive engineering personnel is studied, in accordance with
the projected figure of innovation policy formation in the real sector of the
economy on the basis of effective economic policy. The process of forming industrial
- innovation policies and mechanisms for achieving sustainable development of
formed parameters of the national economy must be synchronized with the
preparation and formation of the engineering staff, which are capable to assess
qualitatively and quantitatively, generate recommendations and mechanisms for
managing industrial - innovative projects on the implementation of the state
industrial policy.
The production process
should be presented as an optimal system that converts resources, labor in the
production on the basis of adequate mathematical models formation. Development
of mathematical models system of the production process, on the innovative
design, allows you to respond quickly to changing requirements of an emerging
market and create a product that meets the expectations of consumers. It is
only possible when the methods processes are actively and consciously applied
for quantifying the quality parameters of industrial - innovative projects.
Global consumer makes industrial organizations continually improve itself on
the basis of management changes. Changes occur under the influence of external
factors - they need to be quantified, i.e. - modeled.
Economic
policy is a set of measures and actions of the Government for
the selection and implementation of economic decisions on macroeconomic level.
The implementation of economic policy means achieving socially significant
goals.
Economic policy
goals are determined by economic situation in a country at the given moment of
time. In the current context the institutes which form and implement the
economic policy faced with new problems that do not have a unique solution.
They include the necessity of ensuring the accelerated transition of the
economy to the new economy based on knowledge, innovations and information
technologies; achieving of the financial stability with simultaneous
implementation of national projects, priority social and economic development
programs of Republic of Kazakhstan.
These problems require serious scientific rationale and have not been developed
in the economic theory.
The process of
economic policy development with a focus on impact of the financial operations
structure on economic growth, budget gap and external payments position is a
financial programming. The financial programming requires consistent initial
data, or more precisely knowledge of how the economy operates, how it will
respond to those or another measures. Particular attention in the financial
programming models is paid to the observance of principle of financial
resources and expenditures equality, as well as funds reallocation mechanism in
the economy to ensure the require level of economic growth and inflation [1].
To fulfill the
financial programming requirement the following key financial documents are used:
1.
Government budget is represented by a set of budgets of all departments,
civil services, government programs, etc.
2.
Monetary survey is represented by state assets and liabilities
standing of state. Monetary survey asset items are net foreign assets of
monetary control bodies and credit companies; internal requirements (net
requirements to state administration agencies, requirements to non-financial
state organizations, to non-financial private agencies and population; to other
financial institutions).
Monetary
survey liability items are money, quasi money, deposits, money market
instruments, capital liabilities, other items (net).
3.
Balance of payments is a statistic statement where in a systematic manner
there is a summary data on foreign economic operations in the given country for
a particular period of time. Balance of payments is a key indicator and tool
which allows determining its financial solvency. On the basis of these key
state financial documents the financial programming method allows to estimate
existing budget limits and sound macroeconomic policy, analyzing the incomes
and expenses of economic sectors.
In
accordance with the definition of the financial program we state the goal
setting.
To
develop macroeconomic program that meets the following requirements, using
financial programming tools:
1. State budget
deficit shall not exceed the value – D,
as a percentage of GDP.
2. External
imbalance shall be surplus and equal – S,
billion tenge.
3. The economic
growth shall be equal – Y, billion
tenge.
4. Inflation
shall not exceed – P, percent per
month.
Through
a macroeconomic aggregate “the economic
growth” the foundation for the state industrial policy and industrial
budget distribution is created.
Values D, S, Y, Ð are
determined on the basis of careful analysis of system of national accounts,
external balance of payments, balance of National Bank of RK, regulated banks
system and government. Most of key problems of financial stability policy may
be explained and analyzed using three equations:
Equation of
budget deficit financing:
where,
- credits granted by
the National Bank to the government;
- government bonds
sale;
- foreign loans to
the government.
Equation of
National Bank Balance presents balance limits within which the National Bank of
RK operates.
where,
- credits of the
National Bank to economy;
- foreign exchange
reserves;
- assets of the
National Bank;
- monetary base, liability of National Bank.
Equation of
inflation:
Improvement of
balance of payments state means reduction of current transactions imbalance
which can be achieved primarily by increasing of trade surplus and increasing
of capital account surplus.
Financial
programming tools implementation procedure for the stated goal setting consists
of the following steps:
The National Bank
(NB) determine inflation level and respective values of monetary aggregates,
among which the most important is M2, the value of monetary anchor.
The Ministry of
Finance (MF) develops a state budget, determines sources of budget deficit
financing, with a maximum focusing its attention on non-inflation sources of
budged deficit payment.
The Ministry of
national economy (MNE) determines a level of the state GDP economic growth and
the level of required financial resources on the monetary survey items.
In case of any
disputes between NB of RK, MF of RK, MNE of RK on macroeconomic aggregates, set
by the performance goal for stabilization program development it is necessary
to:
-
leave the inflation level unchanged;
-
exclude inflation ways of budget deficit payments;
-
exclude the possibility of currency issuance;
-
correct the economic growth level which leads to country industrial policy
correction.
Ordering of state
priorities through the financial programming allows forming courses of draft on
funds of national regulatory bodies and commercial entities. Movement pattern
from the economic policy of the state to the financial resources to ensure the
programmed level of the economic growth, and thus assured implementation of
industrial and innovation policy is shown below.
Budget Balance of
payments
|
Export |
|
Import |
|
Capital account |
|
Variable reserves |
|
State
incomes |
|
State outgoes |
|
|
|
Budget
deficit financing methods |
Monetary survey
|
Asset |
Liability |
|||
|
Net foreign assets (net) |
Ì2 |
|||
|
Net
requirements to the government |
||||
|
Net
requirements to the private sector |
||||
|
Other items of net |
|
Financing
of industrial policy projects with taking into account of target environment
state (D, P, Y, S) |
Industrial
policy is a set of measures of state influence on
public resource allocation in order to improve the national economy structure,
maintain competitive ability of certain industries and enterprises, as well as
economy as the whole on the world markets, adjustment of market actions adverse
effects. The fundamental issue of the industrial policy is a selection of
government support criteria. At the present stage they include primarily
achievement of high-value social and economic development goals: cost-effective
use of resources, development of new industries, competitive recovery of the
country in the sphere of science-based and high-technology products,
environment protection and other.
The main task of
any enterprise in the market economy is meeting demand for certain types of
products and services. To ensure normal course of this process it is required
production costs carry in accordance with planned rates of economic growth of
GDP.
If there are no
any problems with finance in the country, then there are huge issues with their
effective use, industrial process engineering and management. The main reason
causing these problems is less-skilled managers who implement state industrial
policy projects as well as lack of evidence-based approaches to their funding
allocation.
Here are just
some necessary studies for launch of a new industrial innovative project. Is
there any demand for a new product? To answer this question is necessary to
determine whether there is a long-term equilibrium in the market of this
product. If so, all the profit has been already shared between market
participants and appearance of another manufacturer in the market does not
allow even to cover the costs for the project implementation, say nothing of
profit.
For successful
implementation of the project it is necessary to ensure compliance of company
personnel qualification with plant operating conditions, maintenance and
administration. Upon decision on innovative project implementation it is
necessary, first of all, to decide two significant issues:
a) profit
from project implementation shall be significantly higher than costs for its
implementation;
b)
reaching the project capacity shall be when demand for products is on the
elastic line of demand curve, and preferably “as far as possible” from a
unitary elasticity point.
Before
formulating and seeking answers on these questions, an effective economic
policy shall be formed at the state level. The Industrial policy is its
integral part, and economic growth level, inherent in the state economic
policy, depends on its implementation.
Thus, industrial
program implementation process begins from a “monetary survey” of financial
programming, or rather from the determination of monetary aggregate level M2
and its industrial allocation to ensure the planned economic growth.
Based on the
above industrial projects management turns into a task that requires the use of
special tools for analyzing and planning. One of such tools is mathematical
modeling techniques. The prime consideration of necessity to apply mathematical
modeling techniques is the fact that humanity has no experience of transition
from a socialist production method to a market production method.
The evolution of
market relations and state structure formation in post-Soviet states, in the
opinion of the authors, has its specific features. If in
the developed market economy the society basis which is the foundation and
original cause of all processes in the society, is a law and justice, and
suspension – a collection of social institutes that serve for implementation of
plans of a limited circle of people – economy, then in developing market
economies these categories, forming economic structure of a country, changed
places.
As the result, if
a developed market economy produces a predictable and manageable economic
environment due to the rule of law for all market participants, then a
developing market economy produces a constantly changing economic environment
as economic interests dominate over the law. This leads to the fact that market
participants have different presuppositions not only at the start, but in the
process of development, not to mention the prospect of business development. If
in a developed market economy, its methodological basis is a behavioral theory,
and it is governed through «invisible hand of the market», and
in a developing economy its participants shall take decisions under great
uncertainty and instability in the external environment.
Unfortunately,
professional level of project managers involved in the state program for
innovation development of the country is not sufficient for timely assessment
of the significance of these changes, so it does not allow them to successfully
implement breakthrough projects for the economy industrialization. Even more
complications are that managers are not able to identify at least the gradient
of these changes, though it has never been easy.
The peculiarity
of the whole developing market economy compared with developed market economy
does not take it beyond the object of general economic theory. Therefore, the
subject of research in the theory of developing market economy as a whole
remains the same - economic relations of people. However, inclusively it has a
number of specific points inherent in the transition state of society. This is
a general instability, unevenness of the economy, generating a special dynamism
of its development and the relative nature of the changes.
Thus, we can say
that in a developing market economy «invisible hand of the market», it is replaced by an
administrative resource. Obviously, in these conditions, management decisions
are much more complicated and a real tool to develop optimal solutions is
mathematical methods which allow quantifying the qualitative parameters of
economic projects. In other words, this poses the question: - What companies
shall have the opportunity of normal expanded reproduction, thus relatively
less painful transition to market-based economy? This issue is complex and may
be controversial. In actual practice, it is tried to be solved by lobbying.
What priorities can
be selected for the domestic industry? One option is a state support of
enterprises producing relatively simple in technological aspect, typical for
our economy products, which can be successfully and long-term sold both in the
domestic and foreign market, obtaining a stable gain, including currency one.
They are products of fuel-raw material resources primary processing, including
refined products and petrochemicals, agricultural production, leather industry,
metallurgy, etc. The reasoning is available to the country relative abundance
of fuel and raw materials and agricultural resources. But there is an
alternative. The low level of production in the country is observed on the
background of the rapid growth of scientific and technological progress in the
leading industrial countries. The competitiveness of enterprises in the
industrialized countries is determined, first of all, by the development of
industries characterized by high knowledge intensity. This fact can not be
ignored. The world experience shows that in modern conditions of informational revolution long
orientation of the economy of any country to the development of extractive
industries and their primary processing products means consolidation of their
underdevelopment. Therefore, development of fuel and energy industry and
primary processing industry can not remain as a priority for the country for a
long period of time. Their support is necessary both for satisfaction of needs
of its own nation and for foreign currency receiving. Therefore, adopted State
Program of “Accelerated Industrial and Innovative Development” gives priority
to high technology projects and provides a powerful state support of priority
and promising projects. However, the main problem slowing the process of
implementation of these projects is the lack of mechanisms for effective
industrial policy. To develop mechanisms for effective implementation, the
authors propose the mathematical modeling methods, which allow developing
optimal solutions during quantification of quality parameters of implemented
innovative projects for industrialization of the economy.
Economic
and mathematical model is a mathematical model of a process (object) showing
its economic characteristics and designed to study economic aspects of its
operation.
Modeling objects
may be either actual business system, or one or several processes occurring in
the system. To construct a model it is necessary not only specify a name of the
object, but give a description in the form of system, i.e. define the boundaries
of its interaction with the environment, its structure. Models reflecting the
same object from different points of view shall be considered as different.
Construction of a
model by itself is not an end in itself. Most of economic and mathematical models
are constructed with very specific goals, to solve certain design and
analytical tasks. Consideration of these goals is required upon development and
identification of a model, for correct formulation of model adequacy concept
and methods of its verification. The concept of model adequacy has two
different faces. We can say about the model adequacy to the researched actual
process meaning thereby a degree of conformity between its characteristics and
characteristics of the model, and it is necessary to assess the adequacy of the
assigned task.
The model
represents by itself a vision of the reality, whereas some of its sides are not
reflected in the model, while others are described in more detail. Upon
construction of the model, a researcher starts from the system of initial
assumptions which define principles of model formation. Formulation and
consistent implementation of the model construction principles are required for
the correct interpretation of results obtained as the result of problem solving
using mathematical methods.
Industrial and
business systems’ functioning has a systematic and goal-oriented nature.
Therefore, industrial process may be represented as a system with output and
input, which transform input materials (resources, labor) in the process end
result (products). In such situation the system state is defined by a set of
conditions and means ensuring the process course.
One of the main
methodological principles of system analysis of processes is more adequate
definition of inputs, outputs and states of each of the researched processes
and their interaction pattern definition.
To reflect
relations between output, input and process state using the model a concept of
automat is used.
The mathematical
model of industrial system is called automat if it includes: U - a set of possible input actions
(labor, capital, technologies and etc.), Y
- set of sets of possible system outputs (products), and X - set of sets of system states in the given moment. In addition,
two displays shall be assigned: transitional display ψ: Õ→Y. Every moment of discrete time t corresponds to input action u(t) ˆ U, state x(t) ˆ X and
output y(t) ˆ Y, and
transition from a moment t to a
moment t+1 is assigned using displays
φ and ψ: (t+1) = φ( õ(t), u(t)), y(t+1) = ψ( x(t+1)).
Meaning of the
automat concept is that the whole course of the process is divided into
separate discrete steps, in each of which the relationship between system input
and output is defined using the state concept which contains sufficient
information about past system development. Most of currently used economic and
mathematical models are represented either by the whole automat or one of its
parts – transitional or input display.
For products
manufacturing process, a main process of industrial policy, the end products
serve as output, and inputs are defined by supplies of raw materials,
equipment, labor and financial resources, and state is defined by supplies of
means of production and labor power. In modern industrial systems manufactured
products are results of conjunction of many industrial and business processes,
experiencing dissimilar impact of the environment and having different response
rate. Upon these conditions it is usually impossible to evaluate quantitatively
the dependence between industrial process output and input with sufficient
remodeling of internal process structure. On the other hand, a well-known
stability of functioning of the modeled object as economic system gives grounds
to expect for obtaining of “external” description of the process using
statistical data processing. These circumstances create the required
presumptions for using of economic and statistical modeling as one of means for
manufacturing process analysis and control.
Development of
system of manufacturing process mathematical models by innovation project
amounts to creation of a “certificate” of this business object, since such
models generally summarize objective data on the course of this process.
Dynamic response
to changes of the developing market requirements and development of the
products satisfying customer expectations is possible only in the case when
methods of quantitative evaluation of quality parameters for industrial and
innovation projects are actively and consciously applied in this innovational process.
Global consumer forces industrial companies to continually upgrade themselves
on the basis of changes management. Changes are occurred under the influence of
external factors – they shall be qualitatively assessed – i.e. modeled. In
order to bring a company to the forward position, it is necessary to develop
project operational performance achievement algorithm and define all elements
ensuring achievement of the assigned goal. In addition, there can not be the
same receipts for different projects, it is necessary on the basis of modeling
to choose your own route of movement on “progressive way”.
Bibliography:
1.
International Monetary Fund, 2013, «Financial Programming and Policies»,
Chapter, XI, XIV. (Washington: International Monetary Fund).