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Government Regulations on Innovations

In the last decade significant attention is shared to innovative development of the country as one of the determinants of economic development, moreover, it is one of the essential attributes of a competitive society. But it is also worth to note a number of problems encountered on the way to the development of high technology, the main ones are: raw materials, insignificant integration with the global economy, weak inter-sectoral and inter-regional economic integration within the country, the low consumer demand for goods and services in the domestic market (small economics), undeveloped industrial and social infrastructure, the overall technical and technological backwardness, lack of effective communication between science and production, lower costs for research and development work, incompatibility of management objectives of economic adaptation to globalization and transition to a service-technology economy.

In most cases, the government has resorted to borrowing innovations from countries which have already have success in this direction in economic development for the modernization of their own elaboration, as well as for further use in the workplace. Incompleteness of research, their separation from the production, poor funding of R & D can be considered as the cause of this phenomenon, as well as important issues. Conducted applied research projects have continued as commercialization and introduction into production.

World experience shows that a key figure in the  development of innovation-directed economy is the state. It is through this most important institution is the implementation of various programs through targeted public procurement to stimulate innovation sector enterprises sold through special institutions.

Certainly it is impossible to ignore the steps that the government has undertaken to meet the innovative improvement, and certain achievements that once seemed impossible in these conditions. To expand the scale of innovation in Kazakhstan aimed main provisions of the Republic of Kazakhstan “On innovation” and “Program of innovative development of Kazakhstan”.

As it is known Kazakhstan aspires to be among the 50 most competitive countries in the world. Obviously, increasing the role of science is one of the most important factors for the development of a balanced growth of the economy in order to increase  competitiveness. Funding scientific sphere acts in the role of the indicator reflecting the level of scientific and technical potential, as well as the dynamics of its development. So for years of independence for the period 1995-2013 years science funding increased in real terms. There are so-called standards, determining the level of financing of scientific and technical progress. According to the estimates of international experts for the sustainable development of the country requires that your science funding allocated from 2 to 4% of GDP. The threshold value of expenditure on research and development in relation to GDP as an indicator of economic security is considered to be equal to 2%. Recommended by the International Academic Council share of spending on science for developing countries is 1-1.5% of GDP.

Indirect public funding is another indicator of scientific and technological progress, as well as a method to maintain the funding of R & D at a certain level of market conditions. It is to create favorable conditions for public authorities to funding R & D and innovation are interested in the results of their investors on market conditions. Methods of indirect financing include:

  1. Tax These include exemption from taxation of certain categories of taxpayers or individual activities, withdrawal from certain tax object of its constituent elements, establishing tax exemption limit object, lower tax rates for certain categories of taxpayers; postponement of tax collection, a deduction from the amount of tax charged.
  2. Investment tax credit. This is a rescheduling of tax (on profits or income), at which organizations are given the opportunity for a certain period of time and under certain conditions to reduce their tax payments to the subsequent phase of loan amount and accrued interest. Reduction made for each payment of tax as long as the amount unpaid organization as a result of such reductions will not be equal to the amount of the loan provided by the contract concluded between the organization and the Internal Revenue Service. Amount owing called cumulative amount of the loan.
  3. Nontax areas:
  • issuance of state guarantees as collateral for loans, attracted by projects on the market. The most attractive is to provide partial guarantees to not take all the responsibility with the main investor and avoid lobbying concerned officials inefficient projects. Currently, such a guarantee on behalf of the States may issue the Finance Ministry and specially created government agencies (State Investment Corporation and the Russian Financial Corporation);
  • establishment of preferential tariffs for communal services for research organizations, or conduct financial settlements with companies that provide public services.
  • customs exemptions;
  • centralized regulation standardization. State toughens standards and thus indirectly forcing producers to implement innovative projects and provides them with the demand for R & D results;
  • providing public authorities the right to use certain resources as their contributions to create for the implementation of innovative projects economic society. The State may grant the right to use land as a contribution [3].

The process of formation and development of innovation-oriented economy in each state are different based on the time frame and the initial conditions existing at the time of launch of the entire mechanism. Someone is moving steadily, step by step, reaching the intended results, and someone makes a leap under the influence of sound public policy.

In the UK, prior to the 2000s was conducted targeted centralized policy to encourage and promote innovation. In 2003 the Ministry of Trade and Industry published a government strategy for technology development in 2004 was established the Council for Technology Strategy, which invests in the development of new technologies, support their development and commercialization. Regarding the integrity of long-term development strategy of innovative UK was formulated only in 2008.

In the UK, created numerous innovative centers 2 types: focused on the development of specific technologies and the promotion of its use  (created in response to the needs and business opportunities, for example, Printable Electronics Technology Centre, PETEC); and focused on a particular sector or market (created for to bring together the complementary disciplines of science, part of the process chain, etc.).

In Ireland, the role of the state is high in the innovation process: in particular, it is crucial in attracting foreign investment in the development of hightech industries: one of the directions of measures to stimulate the development of high-tech industries is the allocation of R & D grants, lower tax rates for companies that perform research and development.

State invests in Ireland and in a number of projects to provide access to the growing business information, advisory, and educational resources. To support the flow of researchers in Ireland the government of this country has adopted a resolution of the European Communities to attract researchers from third countries (EC Directive on Mobility of Researchers from Third Countries).

In general, innovative entrepreneurship is poor. Once created industrial parks due to insufficient funding, and industrial base turned into technological business incubators and business centers. Tough competitive environment in the global market and a number of the above problems lead to the fact that for financing, venture capital funds of the country can not invest big in innovative technologies. Most small businesses are not connected republic of innovative activity, although the most flexible and receptive to innovations largely because of ignorance of the positive aspects of the innovation sphere. Hence the decline in demand for innovation and lack of investment funds, even though small businesses do not need a large-scale infusions.

Five countries the US, Japan, France, Germany and the UK account for about 80% of expenditure in R & D, and they are concentrated around 50% of the world’s scientific staff.

But at the same time, applied science, the introduction of innovative products into production financed by the private sector. In world practice, about three-quarters of all innovation projects carried out by private firms, the United States the undisputed world leader in the innovation process. In 2013, the country spent on R & D of $ 343 billion. That is 40% of R & D expenditure in the world. Of the total spending on innovation in the United States more than 71% funded by private corporations, 14% universities and only 11% the government. For example, in 2014 the company “Ford Motor” R & D expenditures of $ 7.4 billion., “Microsoft” 6,2 billion dollars, thus becoming the most innovationactive companies.

As is well known innovation has not yet become the main direction of economic development in Kazakhstan: in the domestic economy is not observed any significant breakthroughs, no sign of the development of the self-developed results. The global financial crisis of 2008-09 affected the implementation of the goals, led to a reduction in government spending on subsidies for companies in the field of innovation.

Creating an innovation economy in the Republic of Kazakhstan is a comprehensive economic, social and political task, which may at a concentration in the regions of physical, human and social capital, as well as financial support according to the characteristics of each region. This approach will enable a comprehensive approach to the task and thus achieve greater results. Creating a full-length regional systems would focus on the development of a given region, taking into account its specificity.

In conclusion, we note that the formation and development of innovative economy is impossible without the introduction of a competitive national innovation system and the complex legal institutions and social nature. Set of innovative strategies, as well as state support interaction of educational, scientific, business and non-commercial organizations in all sectors of the economy.

To create an effective national innovation system should:

  • Move away from extraction economy and send forces to complete the country’s industrialization.
  • Improve the quality of innovation infrastructure. Increase the demand for innovation.
  • Increase the concentration of power of innovation in the regions.
  • Reform in statistics measuring the innovation sector in order to provide reliable information that reflects the real picture of all that is happening in this area.

Please note that in order to achieve high rates of annual growth indicators of innovative development in market conditions requires deliberate government policy not only in innovation, scientific and technological, but also in the socio-economic sphere. Rising incomes, education levels and qualifications consumers could become a base for the development of manufacturing high-tech products and services in the country.

Analysis of innovative activity in Kazakhstan shows that the cycle of “science-production”, in the innovation process is completed in the early stages, sometimes not go beyond basic research or manufacturing stage prototype, as domestic enterprises are not able to put them into production.

The main purpose  of  the  innovation  process is to achieve economic, scientific, technical, environmental and social benefits that can be realized with the introduction of innovations. Not necessarily produce computers, mobile phones, in terms of Kazakhstan’s economy can successfully implement technological innovations, such as machinery and equipment for the mining, manufacturing and agricultural industries, establishment of new methods of storing agricultural products, etc. Innovation is the main way of ensuring continued growth and prosperity of the company. Developing new businesses, entrepreneurs create additional social values, sources of improving the lives of the population and the flow of cash.

We should not forget that in economically developed countries now increasingly concentrated global intellectual potential. It increases at the expense of the brain drain from developing countries. Outflow of talented young people is to provide    learning opportunities in higher education, internships, grants. The most capable and budding professionals provide high-paying job. Thus, in the economically developed countries are intellectualization of society and the formation of an economy based on knowledge, as well as to create favorable socioeconomic conditions and incentives for intellectual creativity and self-realization. Due to the influx of highly skilled professionals in the world economy is actively carried out post-industrial restructuring.

The process of training specialists with higher and specialized secondary education, especially in the field of industrial and agricultural production lags behind the needs of the modern process of production. Weak motivation for the choice of technical specialties, largely outdated laboratory facilities of higher education institutions, reduced the interest of enterprises to training and skills development. The process of actual loss of citizens’ right to equal access to education. In this regard, should increase investment in education, which is the most important factor influencing the accumulation and development of human capital and innovation.

The effect of education and its impact on economic growth seen over time. It is therefore necessary to make a special emphasis on the growth of intellectual scientific potential, attracting young people to science.

 

Refereneces 

  1. Financing innovation spb-venchur.ru/regions/44/innovatekz.htm
  2. Review of the international experience of innovative development
  3. strf.ru/material.aspx?CatalogId=223&d_no=39679

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