Ashimova R.М.

Kazakh national pedagogical university named after Abay

Institute for master and doctor training PhD, Almaty

On competitiveness of Kazakhstan in global economy

Introduction

In the current conditions of extension of globalization processes and development of global financial crisis there increased the importance of issue of macroeconomic stability and of increase of competitiveness of national economy. Such important objective was included into «Strategy of steady growth of competitiveness of Kazakhstan and joining to 50 most competitive countries in the world», declared at Message of Head of state Nursultan Nazarbayev to people of Kazakhstan in March 2006, and it got the further development in Messages of 2007 «New Kazakhstan in the new world» and of 2008 «Growth of welfare of citizens of Kazakhstan is the main goal of state politics», «To competitive Kazakhstan, competitive economy, competitive nation», President of the country N.A.Nazarbayev points out that competitiveness of national economy is the main priority of our development.

According to classic attitude, competitive is the economy of that country which economic subjects in conditions of free competition produce goods and services fulfilling the requirements of global market. However in recent years the understanding of state competitiveness is more and more defined by cumulative ability of people and state to compete with other countries at creation of social-economic conditions favorable for human development. The reason is that competitiveness if country shall be formed under influence of synergic effect, which is provided by wide range of technological, financial, commercial, administrative and cultural abilities, knowledge and skills. The new global order significantly increases the role of state in providing favorable conditions for economic sphere.

In international economic literature issue of competitiveness during the last 25 years remains one of the dominant. It began to be broadly discussed at the beginning of 80-es in the USA as search of answers to reasons of success of Japanese economy in the global market, overcoming the treat of «deindustrialization» of American economy and was reflected in analytical publications of Council on national competiveness.

Scientific studies of global (inter-country) competitiveness underline the developments of World Economic Forum — WEF, which are published in it’s annual reports (The Global Competitiveness Report). Popularity of comparative studies of WEF had increased in 90-es due to rising globalization of the world economic system. Also in scientific sphere there popular annual books on world competitiveness of countries, designed and published since 1989 by International Institute on Management and Development (IMD, World Competitiveness Yearbook, Lausanne, Switzerland). Economic Commission for Europe (ECE), beginning from 1996 publishes annual on European Competitiveness Report. In this report, competitiveness of country is examined based on criteria of growth of life standards of population together with possible minimum unemployment. At that, special attention is given to analysis of contribution of information-communication technologies and innovations on the whole to increase of cumulative productivity of industrial factors and economic growth.

As important criteria parameter of further economic transformations in Kazakhstan it shall be chosen high economic growth based on intensive factors, leading to increase of national competitiveness and sustainable growth of welfare in general. In this relation, criteria and indicators of competitive economic shall be:

- economic – indicators showing change of GDP, amounts of investments, increase of production at specialized sectors, labor productivity, level of infrastructure development, level of demonopolization of economy, degree of involvement of economy into foreign economic activity, etc.;

- social – presented by demographic indexes (population size, natural balance, lifetime) indicators of income and poverty levels, and also indicators of state of public health;

- institutional – reflecting degree of development of support and regulation institutes (including those in sectors, regions), level of security of social, state-private partnership;

- innovational – indicators reflecting level of technical and technological development, quality of education, level of intellectual potential, level of knowledge content of production and innovation of its’ development;

- ecological – indicators reflecting the intensiveness of anthropogenic load on environment (wastes, emissions, liter production).

Additional attention shall be given to definition of main criteria and indicators of development of competitive industry. It should be mentioned that industry cannot be competitive equally in every part of global market, which is subject to features of demand in each country market, industrial and foreign economic policy of state, including also international agreements on export trading, content and qualitative condition of analogical industry in country where target market is located. On this basis, estimation of competitiveness of industry is to be efficiently performed at those markets, where industry is present broadly or intends to increase it’s presence. There may be pointed two main criteria of actual (market) competiveness of industry of national economy. The first is involvement of industry into foreign trade, that reflect the ability of it’s entities to compete without state protectionist politics with analogical foreign industries. The second criteria is level of presence of industry at each priority distribution market of country, that characterizes correspondence of produced goods to existing demand upon certain items, presented in market of certain country. To the first criteria the following indicators correspond: indicator of export ratio in total amount of products realized by industry for definite period; territorial structure of export characterizing diversification of export trading. To the second criteria the following indicators correspond: country market share of products of domestic origin; relative market share.

We find that such approach shall be supplemented by such important criteria as ability of industry for constant development and production of innovations, also ability to develop human potential as the main drive force of competitive production.

Rating of competitiveness of countries is made on the basis of two special indexes – index of global competitiveness and index of business competitiveness.

The first index was developed by professor of Columbia University Xavier Sala-i-Martin. It was first published in 2004, but was updated for the newest rating. Index is made on the basis of inquiry upon 12 composites of competitiveness – from infrastructure and education to effectiveness of market of goods and services, macroeconomic stability and competitiveness of companies.

The second index, Business Competitiveness Index, is the detailed investigation of microeconomic features of business dealing. It was made by professor of Harvard business school Michael E. Porter. Report of World Economic Forum says that, as a rule, results of two indexes coincide, yet there are important differences between them.

Speaking of more specific objective on entering of Kazakhstan to list of fifty most competitive countries in the world, in this case it means the advance in rating of Global Competitiveness index of World Economic Forum (WEF). Applicable at present time Global Competitiveness Index in 2006 came to change Growth Competitiveness Index, which was estimated before. Every year World Economic Forum corrects methods of evaluation of Index, enlarges the content of used indicators and number of analyzed countries.

Competiveness of Kazakhstan in world rating

At present time Kazakhstan is formed as country with open economy, oriented at export of goods, services, capital and work force based on competitiveness and mutually beneficial cooperation. Kazakhstan takes leading position in post-Soviet space due to development level of market institutions and aspires to accelerate temps of economic reformations, which will allow it more active integration to world economic system. Furthermore, Kazakhstan succeeded not only to provide security and territorial integrity, but also to achieve high indexes of economic growth [1].

In conditions of globalizations no country may be abstracted from world tendencies of development, as this relation and comparative evaluation of development in system of world economic relations turns into one of the most important factors defining competitiveness of national economy.

International experience presents different methods of evaluation of competitiveness of national economy. Among them we shall mention method of World Economic Forum, Lausanne method (more than 300 indicators), «Atlas» method of World Bank (more than 800 indicators), method of OECD (out running indicators – almost 11 indicators), UN method and other. Nevertheless in economic literature there has not accustomed yet clear understanding of evaluation methods of competiveness of manufacturer, industry, and region.

In general, there should be distinguished global competitiveness of country in the world markets, competitiveness of country in national market and competitiveness at microlevel (level of companies) in national and world markets.

Popularity of comparative studies of WEF increased in 90-es due to rising globalization of the world economic system. Contribution of WEF experts consists of development of applied theory and specific analysis of issue of comparison of macro- and micro competitiveness of countries on global scale, and also formation of extensive database on this topic. In addition to macroeconomic and institutional factors WEF experts focused their attention on quality of company and quality of entrepreneurial sphere [2].

At present time competitiveness of country depends as on productivity of it’s economic system, so as on level of welfare of citizens, and on many other factors not limited by trade sphere only. Thus, professor of Harvard University Robert Lawrence finds that competitiveness shall rely not only on foreign trade, but shall also be evaluated by such criteria as economic growth, inflation, unemployment, difference in population incomes and especially by life standards of population. US Council on competiveness «on system basis analyzes national and worldwide data on production and productivity, salaries and personal incomes, increase of employment, savings and investments, trade, investigations and technological development, among others, and on venture capital» [3].

World Economic Forum is independent nongovernmental organization founded in 1971 in Geneva. Forum’s objective is establishing cooperation between countries for “improvement of international situation”, and also the development of international cooperation on worldwide scale.

According to global competiveness index (GCI), estimated by World Economic Forum (WEF) for years 2010-2011 the most competitive country is Switzerland again, leaving behind Sweden (2 place), Singapore (3 place), and also the USA, which moved down from 2 place of the previous year to 4 place due to macroeconomic misbalance, weakening of private and state institutions, vulnerable condition of financial markets. Until 2009 the USA took the first line in rating.

The data of table 1 show that ten of leaders this time includes Germany (5 place), Japan (6 place), Finland (7 place), Netherlands (8 place), Denmark (9 place). The UK moved one line up to 12 place. China takes 27 place, two positions ahead, Brasilia, another BRIC country, happened to be at 58 place, India – on 51m South Africa – on 54. Russia kept 63 place, Ukraine in new rating took 89 place against 82 place in the previous year.

Table 1 - 10 leader countries according to Global Competitiveness Index, 2006-2010

Country	Rating per year 2006	Rating per year 2007	Rating per year 2008	Rating per year 2009	Rating per year 2010
USA	6	1	1	2	4
Switzerland	1	2	2	1	1
Denmark	4	3	3	9	9
Sweden	3	4	4	4	2
Germany	8	5	7	5	5
Finland	2	6	6	7	7
Singapore	5	7	5	3	3
Japan	7	8	9	6	6
Canada	16	13	10	8	8
Holland	9	10	7	10	10

This time WEF evaluated competitiveness indexes which account different components of investment climate, for 139 countries of the world. The year before there were 33 of them. Rating accounts 12 key factors («columns») of competitiveness: condition of state and private institutions, infrastructure, macroeconomic situation, healthcare and primary education, higher education, effectiveness of employment market, development of financial markets, technological readiness, size of market, innovations. [4].

Kazakhstan took 72 place in competitiveness rating, evaluated by World Economic Forum (WEF) that is evidenced by data of Global Competitiveness Report per years 2010-2011. The republic worsened it’s indexes compared to the previous year, when it took 67 place in this rating.

Table 2 - Global Competitiveness indexes of CIS countries, 2005-2010

Country	Growth competiveness index	Global Competitiveness indexes
	2005	2006	2007	2008	2009	2010
Russia	75	59	58	51	63	63
Kazakhstan	61	50	61	66	67	72
Azerbaijan	89	62	66	69	No data	57
Ukraine	84	69	73	72	82	89
Armenia	79	80	93	97	98	98
Tajikistan	104	96	117	116	116	116
Kyrgyzstan	116	110	119	122	121	121

According to final estimates of 2010, in post-Soviet space Estonia remains the leader, just as in the previous two years, having moved from position 35 to 33. In the upper half of the rating, except Russia, there present Lithuania (47) and Latvia (70). Now the leader among CIS countries is Azerbaijan, which occupies 57 position among 139 countries of the world. They are followed by Russia (63), Kazakhstan (72), Ukraine (89), Georgia (93) (until recently being part of CIS), Moldova (94). As in previous year, this list is completed by Tajikistan (116) and Kyrgyzstan (121).
Armenia occupies the lower line of rating, being on 98 place due to level of economic competitiveness, which is one position lower than year before (table 2).

As it may be seen from data of table 3, global competitiveness index of Kazakhstan in international rating has significantly decreased for the last year. Respectable place is occupied only by «effectiveness of employment market” (18 place). Middle positions are occupied by macroeconomy, size of market, higher education and professional training (59, 55, 59 places respectively). Decrease of positions of Kazakhstan appeared due to all effectiveness factors, innovations and factors of complicacy. Experts of Ministry of Economic Development and Trade of RK, being authors of corresponding Analytical report on this rating, consider that the reason of position loss under these parameters is consequences of world financial-economic crisis.

Table 3 – Results of positions of Kazakhstan in Global Competitiveness Report of 2009-2010 by factors

Global Competitiveness Index	2008-2009		2009-2010		Deviations
	place	points	place	points	place	points
	66	4,1	67	4,1	-1	0
I. Basic factors of economic growth and development:	74	4,9	74	4,3	0	0,6
1.Quality of institutions	81	3,7	86	3,6	5	0,1
2.Infrastructure	76	3,3	75	3,5	1	0,2
3.Macroeconomic stability	74	4,9	59	4,7	15	0,2
4.Healthcare and primary education	81	5,3	80	5,2	1	0,1
II. Effectiveness boosters	64	4,1	69	4	-5	0,1
5.Higher education and professional training	59	4,1	59	4,1	0	0
6. Effectiveness of goods and services market	80	4,1	84	4	-4	0,1
7.Effectiveness of employment market	12	5	18	4,9	-6	0,1
8.Development level of financial market	97	3,8	111	3,5	-14	0,3
9.Technological development level	75	3,2	69	3,5	6	0,3
10. Size of market	55	4,1	55	4,2	0	-0,1
III. Innovations and development level of business:	77	3,5	78	3,4	-1	0,1
11.Competitiveness of companies	86	3,8	88	3,7	-2	0,1
12.Innovation potential	62	3,2	64	3,1	-2	0,1

In addition, they consider that difference in approaches for evaluation of ratings also played role – the estimates are performed on the basis of statistical data, and WEF relies on opinion of those respondents who, due to comprehensive content of questionnaires, shall have high level of knowledge on many and various aspects of development of country [5].

Rating of competitiveness of EC countries

Economy of Sweden is the most competitive in EC. These are the results of study of World Economic Forum, which twice a year evaluates how EC countries fulfill agreements on development of national economies, concluded in 2000. These agreements provided that European economy will develop on the basis of innovations and fair competition, and social warranties for employees will increase. Sweden takes the first place in rating for the second time in a row.

Here, among countries of Europe, are the most favorable conditions for information support of population, and also for clarity of economy and financial infrastructure. The most innovational economy is that of Finland. However this country is only second in total rating, in particular due to insufficient clarity of it’s economy. Denmark is on the third place. Domination of Scandinavian countries is mainly explained by the fact that bigger countries of EC, such as Germany and France, reduced IT expenses in favor of social. The least competitive economies are those of Bulgaria, Romania and Italy (table 4). Among countries intending to enter EC, the most competitive economy is that of Montenegro. If it were a member of EC, it would be somewhere in the middle of the list.

Table 4 – States – EC members due to competitiveness

Country	Points 2010	Rating 2010	Rating 2008	Dynamics
Sweden	5,83	1	1	0
Finland	5,72	2	3	1
Denmark	5,61	3	2	-1
Netherlands	5,51	4	4	0
Luxembourg	5,43	5	7	2
Germany	5,39	6	6	0
Austria	5,39	7	5	-2
France	5,22	8	8	0
UK	5,15	9	9	0
Belgium	5,15	10	10	0
Ireland	5,00	11	11	0
Estonia	4,96	12	12	0
Cyprus	4,83	13	13	0
Slovenia	4,79	14	15	1
Czech Republic	4,71	15	16	1
Portugal	4,70	16	14	-2
Malta	4,58	17	18	1
Spain	4,53	18	17	-1
Slovakia	4,45	19	20	1
Lithuania	4,39	20	19	-1
Hungary	4,28	21	22	1
Latvia	4,21	22	21	-1
Greece	4,18	23	23	0
Poland	4,07	24	26	2
Italy	4,03	25	24	-1
Romania	3,96	26	25	-1
Bulgaria	3,77	27	27	0
Source: The Lisbon Review 2010

The rating is performed on the basis of 12 indicators of competitiveness: «Quality of institutions», «Infrastructure», «Macroeconomic stability», «Health and primary education», «Higher education and professional training», «Effectiveness of goods and services market», «Effectiveness of employment market», «Development level of financial market», «Technological level», «Size of domestic market», «Competitiveness of companies» and «Innovational potential».

Conclusion

Kazakhstan has set an ambitious objective – to enter the list of 50 most competitive countries in the world. It should be mentioned that entering itself will not provide high level of competitiveness of national economy and high quality of life of Kazakhstani people. In this respect, only cumulative efforts of all Kazakhstani community will allow to reach this position among 50 most competitive countries of the world, when each citizen of the Republic of Kazakhstan will be provided with minimum necessary range of services according to worldwide standards.

For the last year global competitiveness index of Kazakhstan has significantly decreased. The locomotive pushing Kazakhstan to high positions at the present time are two parameters: «effectiveness of employment market» and «macroeconomic stability». We consider that for increase of national competitiveness it is needed to develop social and technological spheres, to move upwards in corresponding profile ratings and to diversify risk of loss of competitiveness. In addition, other conclusion concerning national competiveness of Kazakhstan is the remaining low level of development of several spheres, critical for competitiveness, - science, education, healthcare, which is reflected in corresponding ratings of other international organizations. The further development of such parameters as GDP and GNI (gross national income), decrease of inflation level, increase of financing volume of RD and testing works, increase of life and healthcare quality for the purpose of increasing lifetime, prevention of further division of population by income levels, significant increase of financing of education, healthcare, science, etc. is necessary, at very high rates.

Solution of mentioned tasks will promote as general increase of quality of Kazakhstani economy and growth of it’s competiveness, so as advance of country at rating estimations of international organizations, increase of it’s prestige in international arena and entering of Kazakhstan the list of 50 most competitive countries of the world.

List of reference sources

1. Kazakhstan in the modern world: realities and perspectives. – Almaty: KISI at President of RK, 2008. – p.265.

2. Competitiveness of national economy: evaluation criteria and ways for increasing / under scientific revision of Doctor of Economic Science, professor, academic of Research and Development Academy of the Republic of Kazakhstan O.Sabden. – Almaty: Economics, 2007. – p.173.

3. Essentugelov A. Issues of formation of competitive advantages and protectionism in Kazakhstan economy// competitiveness: theory, methodology, practice. – Almaty, 2008. – p.155.

4. CIT – capital, investments, technologies, 9, September 2010 «Step forward and five steps back» Kazakhstan got 72 place in world competitiveness rating, having lost 5 positions, p. 8.

5. Golova I.М. Innovational potential of scientific organizations.// Economic theory magazine. – 2010.№1.p.17.