Models of youth entrepreneurship encouraging in Kazakhstan: current state, systemic issues and long-term outlook

Abstract

Object: The paper seeks to assess the current state of development and effectiveness of support for youth entrepreneurship in Kazakhstan with the development of a long-term strategy for its growth.

Methods: We used statistical data analysis, methods of system, structural and functional analysis, as well as SWOT analysis of youth entrepreneurship and its support mechanism in Kazakhstan.

Results: We have identified key components of the current model of institutional support for the development of youth entrepreneurship in Kazakhstan and the main parameters of their functional effectiveness. The analysis hasrevealed the following: lack of systematic (integrated) support for the development and encouraging youth entrepreneurship including a program-oriented approach (in particular, a special state program for the development of youth entrepreneurship); availability of a small range of institutional tools for specialized support for the development of youth entrepreneurship (including the lack of a special Fund to support youth entrepreneurship); lack of effective coordinated interdepartmental interaction between state, public and non-state institutional segments to support and encourage youth entrepreneurship.

We have revealed main elements of the current model of financial support for youth entrepreneurship in Kazakhstan and its effectiveness'parameters. The analysis has shown the lackof special financial instruments for comprehensive support of youth entrepreneurship and specialized targeted financing of this business segment.

We have revealed systemic issues of development of youth entrepreneurship and its support mechanism in Kazakhstan. The result of the study is a detailed SWOT matrix of youth entrepreneurship and its support mechanism in Kazakhstan and extrapolation of its results to promising strategies for further development of the youth segment in the business sector.

Conclusions: The effective development of youth entrepreneurship in the country is determined by institutional and economic parameters of the current system and its potential dynamics. It is the opportunities for dynamic promotion that are dominating in the cyclical and possibly circular growth of youth entrepreneurship. This requires application of a new methodology for long-term analysis. One of the most important methods of this approach is the foresight, which we study in the next section of this paper.

Introduction

Mainstreaming of youth entrepreneurship in modern conditions arises from the specifics of analytical tools. This specificity is based on the extension of methodological pluralism to the subject-object characteristic of the phenomenon under study. This approach seems to be the most objective since most economic processes are now developing under the influence of a huge number of endogenous and exogenous factors. Moreover, endogenous factors are also ambiguous in their conceptual design. Therefore, an assessment from the perspective of methodological pluralism shall allow us to identify modern dominants more carefully, to embed them in the mechanism of post-industrial development, to determine the boundaries of uncertainty gaps, and to differentiate risks. And in the context of youth entrepreneurship, the conceptual framework diversifies and acquires additional specification ontwo maindeterminants: subject and object ones.

First, the subject determinant of youth entrepreneurship (which is youth) is impossible without its social assessment. Thus, a sociological characterization of "youth" is necessary, highlighting both its subject dominants and social place. At the same time, out of this social nature of youth arises its economic constitution, motives and opportunities for labor and entrepreneurial participation in national reproduction, the limits of business implementation and a unique place in the micro-and macroeconomic structure. So, on the subject side, "youth entrepreneurship" itself, like no other socio-economic phenomenon, is subject to interdisciplinary dualism (simultaneous analysis from both sociological principles and position of modern economic theory).

Second, the object determinant of youth entrepreneurship (which is entrepreneurship) in this context is also in a special methodological corridor of its implementation. After all, modern entrepreneurship is a heterogeneous system based on different concepts. Fragmentary and discrete conceptualization oftheoretical and methodological foundations of entrepreneurship is the reason for the inefficiency of state support measures and the emergence of an institutional "trap." That is when the accepted legal norms and regulatory instruments do not correspond to economic realities and objective patterns of business activity.

This paper'sobjective achievement requires consistent addressing the following tasks:assessment of the effectiveness of current institutional model for supporting youth entrepreneurship; assessment of the effectiveness of current financial model for supporting youth entrepreneurship; identifying systemic issues in development of youth entrepreneurship and its support mechanism in Kazakhstan; specifying features of the foresight in the development of long-term development strategies; development of a foresight approach to modeling development of youth entrepreneurship.

Literature Review

Foreign literature pays great attention to the phenomenon of youth as a social object. Moreover, this interest is differentiated in the following areas. Thus, Moran, P. and Sear, L. (Moran, Sear, 1999),analyze the significance of youth as a separate but integral social stratum. R. Merton (Merton, 2006), E. Fromm (Fromm, 2005) consider the ideology of socio-cultural status; P.L. Berger (Berger, 2005), and T. Luckmann (Luckmann, 2005) formulate the models of intergenerational interaction.M. Mead (Mead,2005) analyze the understanding of theyouth environment's value and worldview differentiation.

Most scientists of the near abroad (Kon, 1987), (Melnikova,2012), (Davidsson, 2005) consider youth as a special socio-demographic society group distinguished by a certain set of features: age boundaries, socio- psychological characteristics, features of socio-economic status and cultural development.

Thus, young people are defined as a socio-demographic group of society identified on the basis of age characteristics and their social status, their place and functions in the social structure of society, as well as their specific interests and values.

The peculiarity of young people is that this group of society is in the stage of social formation, that is, a kind of transitional transformational state (Len'kov, 2014),due to its age and social status.

The term "youth" and its status boundaries have been determined by the scientific and technical revolution and the differentiation of industrial processes. This led to the need to allocate a certain period of life for training and mastering production skills. It is due to the change in the industrial basis of production, the emergence of multi-industry labor,"youth", a certain limiting period,emerges.

We feel important to note that different countries define the age limits of young people differently due to differences in socio-economic, legal, cultural conditions of development and traditions. Most countries accept the age limits of young people in the range from 14 to 30 years (Radchenko, 2012). The Law of the Republic of Kazakhstan "On state youth policy" defines that young people are citizens aged from 14 to 29 [Zakon Respubliki Kazahstan].

In the early 80s, following the results of UNESCO conferences on youth, the upper age limit of the concept of "youth" was determined at 30-35.

Thus, modern science and practice define the age limits of youth entrepreneurship adopted in most countries in the range from 14 to 30 years. The lower age limit of 14 is due to the "opening of access to work", that is, the onset of physical maturity, when a teenager for the first time realizes his social right to choose between studying (at school orcollege) and work. As for the upper limit, it is due to the "achievement of labor and social stability" (Kotlyar,2001). In other words, it is determined by the following conditions:

  • – achieving the level of economic independence, i.e. the ability to create funds for independent living;
  • – achieving the level of personal independence, i.e. the ability to make independent life decisions.

Methods

In the course of the research, we have performed a statistical analysis of the Damu Entrepreneurship Development Fund JSCreports on the state of development of small and medium-sized businesses in Kazakhstan and its regions for 2014—2017. Also, to determine functional effects of the institutional model of support for youth entrepreneurship in Kazakhstanwe have performed a structural and functional analysis of the institutional structures of support for youth entrepreneurship.

The result of the analysis is a detailed SWOT matrix of youth entrepreneurship and its support mechanism in Kazakhstan and extrapolation of its results to promising strategies for further development of the youth segment in the business sector.

Results

The current institutional model for supporting youth entrepreneurship in Kazakhstan can be presented in the form of a matrix that contains the following key institutional structures for supporting youth business activity:

  • national development institutions;
  • non-profit, non-governmental organizations and business associations;
  • elements of innovation infrastructure: innovation clusters, technology parks, business incubators (see Table 1).

Table 1. Functional effects of the institutional model for supporting youth entrepreneurship in Kazakhstan

Institutional structures for supporting youth entrepreneurship

Key organizations

External positive effects of institutional structures for the development of youth entrepreneurship

Youth entrepreneurship support functions

Protection of the rights and interests of entrepreneurs

Information support

Service support

Educational support

Logistical support

Financial support

Innovation and technology transfer

1

2

3

4

5

6

 

8

9

10

National development instituions

Damu Entrepreneurship Development Fund JSC

Supporting the development of youth entrepreneurship as an integrator and operator of financial, information and consulting services and service support (Official website of Damu entrepreneurship development Fund JSC).

 

+

+

+

+

+

 

QazTech Ventures JSC

Main activities: Support for the development of technological entrepreneurship (including youth one) through venture financing, business incubation and technology consulting (Official website of QazTech Ventures JSC).

   

+

 

+

+

+

Kazakhstan Industry and Export Center JSC (KIEC)

Main activities: Assistance in ensuring the industrialization policy, formation of an export oriented industrial policy, development of the "economy of simple things" by stimulating creation of competitive industries to meet consumer demand and replacing imports of socially important food products (Official website of Kazakhstan center for industry and export JSC).

   

+

 

+

+

 

Non-profit, nongovernmental organizations, business associations

The National Chamber of Entrepreneurs of the Republic of Kazakhstan "Atameken"

Protection of business rights and interests, ensuring broad coverage and involvement of all entrepreneurs (including young ones) in the process of forming legal support for business activities (Official website Of the national chamber of entrepreneurs of Kazakhstan AtameKen).

+

+

+

+

     

Association of Legal Entities"Kazakhstan's Young Entrepreneurs Association"

Coordinating the activities of beginning and existing young entrepreneurs, creating favorable conditions for the development of their activities and joint solution of its members'

+

 

+

+

     
   

issues (Official website of the Association of young entrepreneurs of Kazakhstan).

             

Enactus Kazakhstan

An international non-profit organization that brings together active students, businesspeople, and academic leaders to implement entrepreneurial projects aimed at improving the quality of life of people in need (Official website Enactus Kazakhstan).

   

+

+

     

Innovation clusters

Innovation Cluster of Nazarbayev University Astana Business Campus (ABC)

Innovation Cluster of Nazarbayev University Astana Business Campus (ABC) includes ABC INCUBATION, ABC Quick Start, DC Lab designer coworking, Fab Lab coworking, Mashine Shop, technopark coworking, and the "Business Angels" club (Official website of the Innovation cluster of Nazarbayev University " Astana Business Campus (ABC)").

   

+

+

+

+

+

Innovation Cluster

Tech Garden

The cluster implements acceleration and incubation programs, including through grant support, seed investments, and co-investment tools. The cluster provides strategic consulting, recruitment of a startup staff, networking and investor search, startup PR promotion, etc. (Official website of the innovation cluster Tech Garden).

   

+

+

+

+

+

Technology parks

International IT

StartupTechnopark

Astana Hub

Astana Hub implements two programs for the development of IT startups for its residents: incubation and acceleration. The acceleration program is aimed at accelerating selected startup development. Incubation program provides young IT entrepreneurs with a coworking platform, assistance in finding investments, media promotion, access to expert knowledge and advice followed by acceleration in the Astana Hub Technopark.

   

+

+

+

+

+

Innovation Cluster of Nazarbayev University NURIS

The Technopark provides residents with all the necessary conditions for companies to deal with key business issues without getting distracted by additional tasks.

   

+

+

+

+

+

Business incubators

Nazarbayev University Business Incubator

The purpose of the business incubation program is to support new ideas, technological developments, and innovative business projects at an early stage.

   

+

+

+

+

+

MOST Business

Incubator

Support of startup projects at all stages of development through business training, coaching, mentoring; provision of premises (Official website of the most Business incubator).

   

+

+

+

+

 

nFactorial Incubator

This is an intensive 7-week training program for high end mobile developers run by Zero To One Labs, one of the leading mobile developers (Official website of nFactorial Incubator).

   

+

+

+

+

+

SODBI Business Incubator

Main purpose is to support startups and young entrepreneurs through creation and leasing of space at affordable prices, to facilitate their access to financial, material and intellectual resources on preferential terms, to help develop startups through training and consultations (Official website of the SODBI Business incubator).

   

+

+

+

   

Note: Compiled by the authors

The key, most significant organizations that directly support and stimulate the development of youth entrepreneurship are as follows:

  1. among the national development institutions: Damu Entrepreneurship Development FundJSC, QazTech VenturesJSC, Kazakhstan Industry and Export Center JSC;
  2. among non-profit, non-governmental organizations and business associations:The National Chamber of Entrepreneurs of the Republic of Kazakhstan "Atameken," Association of Legal Entities "Kazakhstan's Young Entrepreneurs Association," Enactus Kazakhstan;
  3. among such elements of innovative infrastructureas:
  • innovation clusters: Innovation Cluster of Nazarbayev University Astana Business Campus (ABC), Innovation Cluster Tech Garden ([Official website of the innovation cluster Tech Garden);
  • technology parks: International IT Startup Technopark Astana Hub, Innovation Cluster of Nazarbayev University NURIS;
  • business incubators: Nazarbayev University Business Incubator, MOST Business Incubator, nFactorial Incubator, SODBI Business Incubator .

Institutional model for supporting youth entrepreneurship in Kazakhstan presented in Table 1 includes a number of functional effects.

The first functional effect is to protect the rights and interests of young entrepreneurs and remove administrative barriers. In addition to government agencies,this function is performed by non-profit, nongovernmental organizations and business associations among institutional entities supporting the business activity of young people that we have identified earlier.

The second functional effect is information support, i.e. providing youth business entities with information on measures of state support for business development, creating databases and information exchange systems for youth business entities, including through mass media, ensuring access of young entrepreneurs to economic, legal, statistical and other information necessary for effective development. As can be seen from the matrix of functional effects of institutional support for the development of youth entrepreneurship in Kazakhstan (Table 1), this function is implemented mainly by two institutional entities supporting youth entrepreneurship: Damu Entrepreneurship Development Fund JASC and the National Chamber of Entrepreneurs of the Republic of Kazakhstan "Atameken," which is clearly not enough.

The third functional effect is service support, i.e. entrepreneurprovision with individual consultations of experts and specialized services related to accounting and tax; consulting on customs procedures, development and implementation of management systems, marketing policy, participation in public procurement, public-private partnership, use of information and communication and digital technologies, legal support and document management.

The fourth functional effect is educational support, i.e. entrepreneurship training, successful entrepreneursmentoring, training sessions, master classes, tracking, etc.

Damu Foundation conducts mass entrepreneurship training for the population, including within the framework of the Unified Program for Improving the Competence of Entrepreneurship of the Damu Entrepreneurship Development Fund JSC for 2015—2018, which combines non-financial support measures implemented by the Fund in five main areas: support for startup businesses; support and development of entrepreneurship for people with disabilities; monitoring of services for business support and training of top management of SMEs; creating conditions for the qualitative development of domestic entrepreneurship (Official website of Damu entrepreneurship development Fund JSC).

Forthe first direction, "support for startup businesses," Damu Foundation is implementing two training projects:

  1. "Support for opening a new business," a project stimulating entrepreneurial activity of the population through the development of business competencies necessary for launching a startup able to eventually scale and transform into a successful business. Within the framework of the project "Support for opening a new business" in 2017, 1401 people were trained, 189 private business entities were created, and 22 applications were approved for financial support.
  2. "StartUp Academy," a project to accelerate startups, including youth ones. In 2017, four Startup Academies were started in the cities of Astana, Almaty, Atyrau, and Taldykorgan. In 2017, 419 people were trained, 56 of which started their own businesses, 47 startup projects were attracted to participate in the Fund's financial programs, and 49 projects were supported by private investments/grants (Official website of Damu entrepreneurship development Fund JSC).

In thframeworof theUnifiedPrografor Improving the Competence of Entrepreneurshiof the DamFund,The National Chamber of Entrepreneurs of the Republic of Kazakhstan "Atamekenacts as an Operator for the provision of public non-financial support to entrepreneurs anpopulatiowith entrepreneurial initiative since 2015.This includes for potential, aspiring and existing entrepreneurs ithe following free educational projects:

  1. School for Young Entrepreneurs (SYE) is a prografor young people aged 18 to 29, providing training the basics of entrepreneurshiptyoung people, providinconsultinservices fothe preparation of business plans and organizing their protection at the "idea faircompetition, helping the best business projectwinning this competition in obtaining funding. certificate of completion of training under the SYE projecentitles one to participate in the competition for grant fundinunder the "Business Roadma2020"Program(Official website Of the national chamber of entrepreneurs of Kazakhstan AtameKen), (Resolution of thGovernment of the Republic of Kazakhstan dated August 25, 2018 No. 522 "on approval of thState program for business support and development" business Roadmap, 2020). In 2017, 1,03young people were trained at SYE.
  2. "Business Adviser" is two-day long express course on the basics of entrepreneurship for beginninand existinentrepreneurs providineducational materials and issuing personal certificates upon completionwhich givthe right tparticipatin the competition for grant funding under the "Business Roadma2020"Program. In 2017, 19,076 people were trained undethe Business Adviser project, including 4,96young people (aged 1to 29) (26% of all students); i2018, 16,959 people were trained, includin4,588younpeople (aged 17 to 29) or 27.1 % (Figure 1) ([Report on thimplementation of services for thimplementation of training projects in the framework of the "Business school" component, 2018.). Thgreatest number of young participants were registered in Astana (550 people), Almaty (477 persons), Aktobregion (411 persons), Turkestan region and Shymkent (39people) anKaragandregion (34people). Ipercentage terms, the highest shareof young participants ithe general population in the regioaretaken bthe North Kazakhstan region (41,8%), Karaganda region (33.3% of all participants in the region), Astan(33.0%), and Aktobe region (30.7%).

Young age (17 to 29)

  • Middle age (30 to 49)
  • Preretirement age (50 to 57)
  • Over 57

Fig. 1. Structure of participants in the educational project "Business Adviser" of the National Chamber of Entrepreneurs "Atameken" by age in 2018

Note: Compiled by the authors based on the source ([Report on the implementation oservices for the implementation of traininprojects in thframework of the "Business school" component, 2018.)

  1. "Business Growth" is a training courson sustainable businesdevelopment for existing entrepreneurs bearing a certificate of completion of "Business Adviser" courses. In 2017, 19,076 people were traineunder the Business Growth project, including 4,962 young people aged 18 to 29 (26% of all students) (Official websitOf the national chambeof entrepreneurs of Kazakhstan Atameken).
  2. "Project-based training usinmentoring principles" is the provision of professional knowledge to aspiring entrepreneurs based on practical examples of existinbusinessewith the participation of successfuentrepreneurs and industry specialists. In 20171,100 people were trained in "Project-based training usinmentoring principles", including 249 young people aged 1to 29 (or 22.6%); in 2018, 1,158 people wertrained, including 258 young peoplaged 18 t29, or 22.3% of all students (Figure 2) ([Report on the implementation of services for the implementation of training projects in the framework of the "Businesschool" component, 2018). The greatest numbers of younparticipantwere registered in Zhambyl regio(26 people), West Kazakhstan region (21 people), East Kazakhstan region (21 people) and Astana (20 people). In percentage terms, the highest shares oyoung participants in the general population ithe regioaretaken bthe Western-Kazakhstaregion (32,3%), and Pavlodar regio(30%).

Fig. 2. Structure of participants in the educational project "Project-based training using mentoring principles" of the National Chamber of Entrepreneurs "Atameken" bage in 2018

Note: Compiled by the authors based on the source (Report on the implementation of services for the implementation of training projects in the framework of the "Business school" component,2018).

"Bastau Business" is a project teaching the basics of entrepreneurship in the frameworof the Program for the development of productive employment and mass entrepreneurship for 2017—2021 "Enbek" [45]. Upon completion, participants receive certificates granting the right for microcredit financinof the business project at a reducerate of 6% per annum, as well as the ability to support the business fo1 year. "Bastau Business" was launched in 2016 in Mangistau and Aktobe regions.I2017, the project woulcover 80 districts, 15,000 participants (of whic30.7% are representatives of the age group o17-29), an3000 (or 20%) completed projects. At the same time, 22% (713 people) of those who have started their owbusinesses belong to the category of young people (aged 17-29). During the first half of 2018, 2 traininstreams were implemented, 12,645 people wertrained, of which 24.8(3,134 people) were young peopl(Official website Of the national chamber of entrepreneurs of KazakhstaAtameken).

The fifth functional effect of the current model of institutional support for the development of youth entrepreneurship in Kazakhstan is material and technical support, namely: free office space, coworking, provision of equipment, workshops and laboratories, etc. This function is being effectively implemented mainly by subjects of innovative infrastructure:

  • innovation clusters, including the Innovation Cluster of Nazarbayev University Astana BusinesCampus (ABC), and the Innovation Cluster Tech Garden;
  • technology parks, includinthe international Technopark oIT startupAstana Hub, NURITechnopark of Nazarbayev University;
  • business incubators, including Nazarbayev UniversitBusiness Incubator, MOST Business IncubatornFactorial Incubator, and SODBI Business Incubator.

These same institutional entities of the innovation infrastructure supporting youth entrepreneurship generate another functionaeffect, the transfer of innovation and technology, that is, they transfer scientific antechnical knowledge and advanced technological experiencfor the development oinnovative youth entrepreneurship, the application of technological processes, and crowdsourcing.

For example, the Innovation Cluster of Nazarbayev University Astana Business Campu(ABC) includes the following: ABC INCUBATION, ABC Quick Start, DC Lab designercoworking, FaLabcoworking, MashinShop, Technopark-coworking, and the "Business Angels" club. NURIS Technoparis a part of the Innovation Cluster oNazarbayeUniversity Astana Business Campus (ABC).

Another most significant institutional subject of innovative infrastructure to support high-tech youth entrepreneurship is the International ITStartup Technology Park Astana Hub, whose dominant purpose is to become a regional hub of the global innovation ecosystem, an international center for high-tech IT startups that produce breakthrough IT companies.

The results of the first acceleration program for the development of IT startups, which was implemented in early 2018, were 151 applications across Kazakhstan and selection of 12 best startups of young entrepreneurs. As part of the acceleration program, startup teams created a minimal viable product (MVP) for their business idea, attracted first-time buyers, and presented their projects to potential investors. The results of the second acceleration program for the development of IT startups, which started in July 2018, were 80 applications and selection of 12 best startups, of which 7 projects successfully passed the acceleration. The results of the third acceleration program for the development of IT startups from November to December 2018 were 146 applications from young entrepreneurs of Kazakhstan and selection of 30 best IT startups, of which 27 successfully completed the third acceleration program. Currently, the Technopark supports more than 150 projects and 510 participants in acceleration and incubation programs within the Astana Hub.

These are the key components of the current model of institutional support for the development of youth entrepreneurship in Kazakhstan and the main parameters of their functional effectiveness. The analysis has revealed the following: lack of systematic (integrated) support for the development and encouraging youth entrepreneurship including a program-oriented approach (in particular, a special state program for the development of youth entrepreneurship); availability of a small range of institutional tools for specialized support for the development of youth entrepreneurship (including the lack of a special Fund to support youth entrepreneurship); lack of effective coordinated interdepartmental interaction between state, public and nonstate institutional segments to support and encourage youth entrepreneurship.

The current model of financial support for youth entrepreneurship consists of the following main tools:

  • financing activities of young entrepreneurs through conditional funddepositing in second-tier banks(STBs), leasing companies and microfinance organizations;
  • subsidizing the interest rate on loans and financial leasing agreements for young entrepreneurs;
  • partial guarantee of loans to young entrepreneurs.

Currently, Damu Entrepreneurship Development Fund JSC is a key national development institute that implements the above-mentioned financial support tools for youth entrepreneurship. Let us analyze them in more detail.

The first tool of the current financial model for supporting youth entrepreneurship is Programs for conditional fund depositing in STBs, leasing companies and microfinance organizations for subsequent entrepreneurfinancing.

Since November 2007, the Damu Fund has been an operator for conditional fund depositing in STBs and leasing companies for subsequent lending to private businesses, including young entrepreneurs. Currently, the Damu Fund finances entrepreneurs through more than 30 conditional depositing programs. To start a business, citizens can get a loan of up to 16 million tenge. The "Business Roadmap 2020"Programprovides an express guarantee tool for young startup entrepreneurs. Young entrepreneurs can get a loan from banks providing 15% of the collateral whilethe Damu Fund provides the rest. The maximum nominal microloan rate for the final borrower is 6% per annum.

Since the Programs for conditional fund depositing in STBs started, the Damu Fund has financed 1,621 young entrepreneur (under 29 years of age) projects for a total amount of 23,641 million tenge with an average annual (for 2014—2017) growth rate of projects by an average of 50% and the amount of funding by 25%. In the regional context for 2014—2017, the largest share in the total number of funded young entrepreneurbusiness projects is accounted for in South Kazakhstan (12.4%on average for this period), Almaty (8.0%), and East Kazakhstan region (7.7%). At the same time, in 2014—2017, the largest share in the total financing of young entrepreneurbusiness projects was recorded in Astana (19.9%on average for this period), Almaty (99.9%) and South Kazakhstan region (8.5%). By industry in 2014—2017, the largest share in the total number of funded young entrepreneurbusiness projects is accounted for by trade (49.2% on average for this period), providing other types of services (19.1%), and manufacturing (9.6%). The largest share of the total financing of young entrepreneurbusiness projects for this period is also directed to these sectors: trade – 39.2%, provision of other services – 21.5%, manufacturing – 12.0% (Report of JSC "Damu entrepreneurship development Fund" on the state of development of small and medium-sized businesses in Kazakhstan and its regions, 2014-2017).

The second tool of the current financial model for supporting youth entrepreneurship is subsidizing the interest rate by the Damu Fund for a loan (leasing) for a business entity. This tool of state financial support for entrepreneurship used for partial reimbursement of entrepreneur's expenses for paying interest on a loan (leasing) on a gratuitous and irrevocable basis, is legally stipulated in the State program for business support and development "Business Roadmap 2020" (DKB-2020) (Resolution of the Government of the Republic of Kazakhstan dated August 25, 2018 No. 522 "on approval of the State program for business support and development" business Roadmap, 2020).

By 2018, 1,069 young entrepreneur (under 29 years of age) projects were subsidized under the DKB- 2020 for a total amount of 200,380 million tenge in loans with a growth rate of 31% in the number of projects and 28% in the amount of financing in 2017. In the regional context, for 2014—2017, the largest share in the total number of subsidized young entrepreneurbusiness projects is accounted for in Aktobe (9.5%on average for this period), Pavlodar (8.5%), and East Kazakhstan region (8.0%). At the same time for 2014— 2017, the largest share in the total amount of subsidies for young entrepreneurbusiness projectswas recorded in the East Kazakhstan region (14.2%), Almaty (12.3%), and North Kazakhstan region (11.7%). In the industry context for 2014-2017, the largest share in the total number of subsidized young entrepreneurbusiness projects is accounted for by transport and warehousing (29.6%), manufacturing (27.2%). The largest share of the total financing of young entrepreneurbusiness projects for this period is also directed to these industries: manufacturing – 52.9%, transport and warehousing – 14.2%, (Report of JSC "Damu entrepreneurship development Fund" on the state of development of small and medium-sized businesses in Kazakhstan and its regions, 2014-2017).

The third tool of the current financial model of support for youth entrepreneurship is a partial guarantee on loans of business entities by the Damu Fund. In 2018, state program for business support and development "Business Roadmap 2020" introduced a portfolio guaranteeon the guarantee instrument, the peculiarity of which is that the Damu Fund does not assess each entrepreneur's application individually, but gives partner banks permission to obtain guarantees for loans that meet the program criteria within the set limits. This significantly reduces the time frame for reviewing applications for loans issued under guarantees; reduces the set of documents provided by borrowers; eliminates double decisionmaking on the guarantee (by the second- tier bank and the Fund) (Report of JSC "Damu entrepreneurship development Fund" on the state of development of small and medium-sized businesses in Kazakhstan and its regions, 2017.)..

By 2018, 805 young entrepreneur (under 29 years of age) projects were partially guaranteed for the total amount of 9076 million tengein loanswith the growth rate for 2014—2017 in the number of projects by 150% and the amount of financing by 182%. In the regional context for 2014—2017, the largest share in the total number of young entrepreneurs who received partial guarantee of business projects is accounted for in Astana (12.9%on average for this period), Atyrau region (11.7%), and Almaty (10%). At the same time for 2014—2017, the largest share in the total volume of partial guarantee of young entrepreneurbusiness projects was recorded in Astana (14.5%on average for this period), Almaty region (14.2%), and Almaty (12.3%) (Table 3). In the industry context for 2015—2017, the largest share in the total number of young entrepreneurbusiness projects with partial guarantees is accounted for in the manufacturing industry (25%), transport and warehousing (22.9%), and other services (20.5%). The largest share of the total volume of partial loan guarantees for young entrepreneurbusiness projects during this period is also directed to these industries (Report of JSC "Damu entrepreneurship development Fund" on the state of development of small and medium-sized businesses in Kazakhstan and its regions, 2014-2017).

These are the main elements of the current model of financial support for youth entrepreneurship in Kazakhstan and the parameters of its effectiveness. The analysis has shown thelack of special financial instruments for comprehensive support of youth entrepreneurship and specialized targeted financing of this business segment.

Discussions

Identification of systemic issues in the development of youth entrepreneurship and its support mechanism in Kazakhstan

SWOT analysis matrix is a universal and relevant form of structured description of the studied object and the quality of its internal and external environment. Since this section is the result of the previous analysis of the current state of youth entrepreneurship, its socio-economic subjectivity, and the effectiveness of institutional and financial mechanisms to stimulate business activity of young people in Kazakhstan, we have developed a detailed SWOT matrix for youth entrepreneurship (Table 2).

Table 2. SWOT matrix for youth entrepreneurship development and its support mechanism in Kazakhstan

 

Internal factors of youth entrepreneurship and its support mechanismeffectivenessdevelopment

Strengths, S

Weaknesses, W

  1. Effective solution to the issue of youth employment, unemployment and job creation
  2. High young entrepreneur innovation, ability to use modern technologies, orientation to new products, new markets and production methods
  3. Mobility, rapid response of young entrepreneurs to changes in the market conditions, allowing them to form a wide range of products and services
  4. Opportunity for young entrepreneurs to start a business with a small startup capital, which allows them to increase the pace of development of the youth business segment in the short term and increase its share in the overall structure of SMEs
  5. High adaptability and flexibility of youth entrepreneurship
  6. Extensive opportunities for performing auxiliary outsourcing functions in the integration chain of small and large businesses
  7. High level mainstreaming of education and constant opportunity for young people to systematically update their knowledge and skills
  8. Readiness of young people to take entrepreneurial risks, including due to lack of negative life experience

W.1. Low level of business literacy, undeveloped practical skills

W.2. Lack of startup capital, low level of youth business's financial stability, lending obstacles

W.3. Unformed business reputation, little experience of socialization of young people

W.4. Small transaction volumes, low level of scaling and capitalization of youth business

W.5. Lack of legal definition of the "youth entrepreneurship," "subjects of youth entrepreneurship" and "young entrepreneur" concepts

W.6. Lack of systematic comprehensive support for youth entrepreneurship, including a results-based approach to the development of youth entrepreneurship

W.7. Small range of institutional and financial instruments for comprehensive specialized support for the development of youth entrepreneurship

W.8. Insufficient awareness of existing measures and tools for state support of youth entrepreneurship

W.9. Lack of a unified register of youth business entities and comprehensive statistical accounting of their performance indicators

External factors of youth entrepreneurship and its support mechanismdevelopmentsustainability

PROMISING STRATEGIES FOR THE DEVELOPMENT OF YOUTH ENTREPRENEURSHIP

Opportunities, O

O.1. Continuous growth of innovative technologies and global demand for innovative, high-tech products

O.2. State policy orientation on modernization of the economy and possibility of using the youth entrepreneurship segment for accelerated development of innovative industries

O.3. Reduction of administrative barriers to business, simplification of a procedure for registering business entities

O.4. Possibility of using effective and appropriate global practices for the development and support of youth entrepreneurship

O.5. Active development of innovative infrastructure elements, joint work areas

O.6. Enhancement of entrepreneurial skills through educational projects

S-Ostrategy

(a strategy to use strengths in

a favorable environment and opportunities for development) –

A strategy for integrated growth of youth entrepreneurship:

  1. Ensuring sustainable growth dynamics of youth entrepreneurship and strengthening the role of youth entrepreneurship in the formation of a middle class
  2. Stimulating the creation of new market niches for youth entrepreneurship
  3. Focus on stimulating innovative high- tech youth entrepreneurship and creation of a special tax treatment for it
  4. Development of a system of specialized youth business incubators and technoparks, as well as allocation of separate quotas for youth business

W-OSTRATEGY

(a strategy to minimize weaknesses through the use of favorable external opportunities) –

A strategy for concentrated growth of youth entrepreneurship: Development and implementation of a systemic support for youth entrepreneurship, including the following:

  • development of special youth entrepreneurship legislation and the legislative consolidation of the concepts of "youth entrepreneurship," "subjects of youth entrepreneurship" and "young entrepreneur" with setting the age limit and subject composition
  • implementation of a program- oriented approach to stimulating

carried out under the state support for youth entrepreneurship

O.7. Established mechanism of state institutional and financial support for small and medium sized businesses

O.8. Trends in the growth of consumer demand for hand-made products, environmentally friendly products

projects for placement in existing universal business incubators and technoparks

  1. Development and implementation of an effective system for monitoring the activities of infrastructure elements supporting youth entrepreneurship (business incubators, technology parks, technology transfer centers)
  2. Creating an effective risk insurance system for youth innovative and high- tech entrepreneurship

business activity of young people and implementation of a special state program for the development of youth entrepreneurship

  • expanding the range of institutional tools for comprehensive specialized support for the development of youth entrepreneurship (including creation of a special Fund to support youth entrepreneurship)
  • maintaining a unified register of youth business entities and their statistical records
  • strengthening information and educational-consulting support for young people in entrepreneurship

Threats, T

T.1. Insufficient population solvency due to insufficient real income

T.2. Instability of the national currency, devaluation trends

T.3. Difficult access to bank loans due to high interest rates and strict requirements for collateral

T.4. Lack of effective cooperative relationships and cluster mechanisms in the large and small businesses interaction

T.5. High level of competition between producers in terms of price/quality ratio, including increased global and interregional competition (within the framework of the EEU and the WTO)

T.6. Dependence on the use of imported raw materials and equipment

T.7. Dependence of the system of financial support for SMEs on the volume of budget financing, foreign exchange receipts to the National Fund and world prices for raw materials

T.8. Low availability of material resources and means of production

S-T STRATEGY

(a strategy to use strengths to minimize adverse effects of environmental threats) –

A strategy of diversified development of youth entrepreneurship:

  1. Creation of a single effective system for coordinating interdepartmental interaction between state, public and non-state institutional segments of support and encouraging youth entrepreneurship
  2. Development of cooperation and subcontracting of young entrepreneurs and large businesses, including through the development of legislation, tax incentives for the latter
  3. Creation of a system of state orders for youth business products
  4. Simplification of procedures for access of young entrepreneurs to the use of real estate objects, land plots, industrial and office premises, experimental and laboratory facilities, energy facilities, etc.

W-T STRATEGY

(a strategy to minimize weaknesses in the face of adverse consequences of environmental threats) –

A strategy for targeted development of youth entrepreneurship:

  1. Identification of system-forming priority areas for the development and support of youth entrepreneurship
  2. Creation of separate niches for youth business entities through additional support mechanisms, development of "ready-made solutions" by the banks for effective youth business management
  3. Updating financial support tools for young entrepreneurs, including by providing them with special tax and loan relief, with means of production, and insuring their commercial risk
  4. Stimulating demand for young entrepreneur products, including by ensuring their broad access to public procurement
  5. Creation of "hotlines" for the starting and development of business by young people

Note: Compiled by the authors

Our previous analysis and SWOT diagnostics have revealed the following weaknesses and systemic issues in the youth entrepreneurship development, as well as the mechanism for its support in Kazakhstan:

  • low level of business literacy, undeveloped practical skills;
  • lack of startup capital, low level of financial stability of youth business, difficulties with lending;
  • weak personal connections and little experience of networking, unformed business reputation, little experience of socialization of young people;
  • small volume of transactions, low level of scale and capitalization of young businesses;
  • lack of a legal definition of the concepts of "youth entrepreneurship," "subjects of youth entrepreneurship" and "young entrepreneur" andsetting the age limit and subject composition;
  • lack of systematic (integrated) support for the development and encouraging youth entrepreneurship, including a program-oriented approach (in particular, a special state program for the development of youth entrepreneurship);
  • small range of institutional tools for specialized support for the youth entrepreneurship development (including the lack of a special Fund to support youth entrepreneurship);
  • lack of effective coordinated interdepartmental interaction between state, public and non-state institutional segments to support and encourage youth entrepreneurship;
  • lack of special financial instruments for comprehensive support of youth entrepreneurship and specialized targeted financing of this business segment;
  • insufficient awareness of existing measures and instruments of state support for youth entrepreneurship;
  • lack of a unified register of youth entrepreneurship entities and comprehensive statistical accounting of performance indicators of young entrepreneurs.

In general, identification of internal factors of its development effectiveness (strengths and weaknesses) and external factors of sustainability (opportunities and threats) in the SWOT matrix of youth entrepreneurship has allowed us to extrapolate the results of the analysis to develop promising strategies for further development of youth entrepreneurship aimed at overcoming systemic issues, neutralizing threats and using potential opportunities.

Conclusions

Systemic issues in the development of youth entrepreneurship and its support mechanism, positive and stagnant trends associated with a certain latent institutional anomie and functional deformations in the mechanism of support for youth entrepreneurship can be overcome with presented strategies, taking into account the dominant factors of the external environment, its opportunities and threats.

Thus, the effective development of youth entrepreneurship in the country is determined by institutional and economic parameters of the current system and its potential dynamics. It is the opportunities for dynamic promotion that are dominating in the cyclical and possibly circular growth of youth entrepreneurship. This requires application of a new methodology for long-term analysis. One of the most important methods of this approach is the foresight, which we study in the next section of this paper.

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Year: 2020
City: Karaganda
Category: Economy