Strategy for Success

The president’s state-of-the-nation address, Strategy Kazakhstan 2050: A new policy of the established state, is an outstanding event in the life of our country, as it opens up a new chapter in the history of our independence, where the focus is on sustainable development, the growth of the material well-being of the population and strengthening of human and social capital.

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President Nursultan Nazarbayev’s Strategy Kazakhstan 2050: A new policy of the established state, is a landmark event. It reflects the president’s vision of the world’s future and Kazakhstan’s place it in. The strategy has emerged at a time when developed countries are struggling with the impact of the global financial crisis, and Europe and the United States feel the pressure of serious debt on their economies.

All this suggests that Kazakhstan has coped with the consequences of the global crisis and is now looking into the future. What is the key to our success?

In 2008, when the real estate bubble in the United States burst and the current global crisis began to gain strength, the UK’s influential Daily Telegraph named the countries that would follow Iceland to the verge of financial catastrophe. Kazakhstan was on this list. However, that negative scenario did not come true. Instead, Kazakhstan was among the few countries that closed 2009 with GDP growth. Kazakhstan’s economic volume even reached that of Ukraine in 2009.

“Can you imagine? A country with nearly 50 million and enormous economic potential, and Kazakhstan becomes equal to it economically,” Nazarbayev said, summing up the development of the country in 2009. The Daily Telegraph’s prediction did not come true because it did not take into account a number of circumstances. First, that Kazakhstan uses its resources rationally, including National Fund reserves, which were used to stabilise economy. In 2009, $10 billion was allocated from the National Fund for an anti-crisis programme to overcome the effects of the global crisis. It should be noted that the fund was established in Kazakhstan after the world economic crisis of the late 1990s, and that experience was taken into account.

Secondly, we avoid “Brownian” chaotic movement in development, sticking to strategies and adjusted rates, which reduce the risks and threats in the development process. The fact that in May 1992, at the dawn of independence, President Nazarbayev signed the Strategy of the Development of Kazakhstan as an Independent State says a lot. Kazakhstan had the Strategy 2030 and many programmes, and in the midst of the crisis, the President instructed the government to develop anti-crisis measures.

“Our actions and decisions will largely determine the success of the new stage of development of our country,” the head of state noted later.

The anti-crisis programme was Kazakhstan’s response to the current challenges, among which were falling rates of economic growth and material well-being of citizens. As a result, we were able not only to create new jobs in the economy to support our workers, but also to save time and resources. The fact that we are thinking not about the global crisis, but about the country’s development in the foreseeable future is our reward today.

Third, Kazakhstan prefers not to wait for the mercy of fate but to take operational decisions. We acted in such way in the mid-1990s, when the Soviet Union collapsed and economic ties were broken. The devastating effect on the economy then was much larger than that of the current global crisis. In the mid-1990s, we quickly carried out reforms that enabled us to build a market economy and competitive financial system and later to become leaders in the post-Soviet space.

These three factors in the 2000s guided the rapid growth of the domestic economy. The question is not just about GDP growth, which reached 10.9 percent and was one of the highest in the world economy. The fact that the fruits of reforms had a positive impact on the population and experts noted a positive balance of foreign migration is no less important. Kazakhstan began to be seen as a good place to be. In addition to the growth of the population’s income, there was an increase in life expectancy and fertility rates.

Thus, we can say that the experts from The Daily Telegraph focused on the risks that Kazakhstan would face in the midst of the global crisis, but did not take into consideration the fact that the country was one of the first to develop and adopt a bailout programme and to use the required resources to stabilise economy. All this enabled us to meet the challenges of the global economy, i.e. the decline in GDP growth and citizens’ welfare.

“Kazakhstan withstood the challenge. The crisis did not destroy our achievements but made us stronger,” the President said in his state-of-the-nation address.

Advance Actions

The post-crisis period will change the world, and traditional ideas about it. Kazakhstan is already looking for answers to the challenges of coming changes. This is clearly understood from the President’s address, which lists the threats that will appear in the coming decades: global demographic imbalances, lack of drinking water, food crises and the exhaustion of natural resources. All of them are not related to the current global crisis, but have a long-term nature and are an aspect of the current problems of any state.

The food crisis, which declared itself in 2008, when millions of people were unable to buy food, is probably the first alarm signal associated with a growing population. In 2011, the world population reached seven billion people.

According to United Nations estimates, by 2050 the population on the planet will reach nine billion. That will generate serious problems, including the ageing of the population. According to the U.N. report “World Economic and Social Survey 2010: Redevelopment of the World,” by the middle of the 21st century, every fourth resident of a developed country and every seventh citizen of the third world will be over 65 years old. As Nazarbayev noted, “In 40 years, the number of people over the age of sixty will exceed the number of those under 15.”

The decrease of the economically active population will put pressure on business structures and political institutions. Today, not every country can remain competitive in the global economy with their “demographic baggage.” The country that finds a panacea for an ageing society today will become a leader on the world stage tomorrow. That is why industrialised countries are paying more attention to elderly people, developing a line of gerontology. The National Institute on Ageing established in the U.S. in 1974 monitors and studies the impact of population’s ageing on a society. In the West, everything is done for people of advanced age to keep healthy and in good spirits. We must keep up with other countries. This will give rise to reforms of the pension system and will affect the social system.

We should also take into account changes in the energy sector. Currently, a number of European countries generate more than 20 percent of their electricity from wind and sun. In Kazakhstan, the figure is several times lower, although according to the UN Development Programme-Global Environment Facility (UNDP-GEF) the potential of wind power in the country exceeds its needs for electricity 10-fold. In this connection, President Nazarbayev set the task of increasing the share of renewable energy to 50 percent.

Energy of the 21st century will reduce the burden on the environment, which in Kazakhstan leaves much to be desired. The sustainable development of Kazakhstan depends on alternative energy. There is no need to create illusions: in 20-30 years, the world will put heavy pressure on the polluters of the environment. The sooner we transfer to the alternate, sustainable path, the less criticism we’ll face in the future.

“It is fundamentally important to rethink our attitude to our natural resources. We must learn to manage them properly, collecting income from their sale, and most importantly, to transform the natural resources into the sustainable economic growth of our country,” the President said in his address.

Capital of the 21st century

As it was noted in the address, we must also pay a lot of attention to social issues.

In recent years, there have been many studies on this topic, including the work of famous American philosopher Francis Fukuyama, “The Great Disruption,” in which the loyalty of individuals to society and trust between large and small social groups are considered as new sources of economic growth and even a tool to enhance productivity. This means that a country with high social capital has a better chance of success in competition.

The question arises: what is Kazakhstan’s potential in this area?

The answer is obvious. The fact that representatives of different nationalities and religions live in the country in peace and harmony suggests that during the years of independence they have reached a high level of confidence. We are reaping the fruits of this social phenomenon. Thanks to it, stability in the country is strengthening, which in turn supports economic growth. The population feels the positive effects of steady confidence in the society. The average life expectancy is growing and the younger generation has an opportunity to receive education at home and abroad.

Ethnic peace and harmony in the society form not only comfortable and favourable living conditions for different ethnic groups, but also have a positive impact on the business and investment climate in the country. As experience shows, in the era of globalisation, the spiritual atmosphere is an additional factor in attracting investments, as at issue is not just the influx of capital and money, but also the people who came to the country to support its economy. Kazakhstan, one of the leaders of the former Soviet Union in attracting investment, confirms this rule.

Since independence, President Nursultan Nazarbayev has attached great importance to interethnic peace in the country, and today it is important not to lose this commitment. “We must learn to live in the coexistence of cultures and religions. We must be committed to the dialogue of cultures and civilizations,” the President said in response to the challenges of the 21st century.

During the years of independence, Kazakhstan has witnessed the lack of stability in other former Soviet republics, strife within societies and the growing escalation of violence. These negative trends restrained their development and contributed to the growth of poverty.

In contrast, Kazakhstan has big prospects. This is confirmed by the report of the financial holding company HSBC, “The World in 2050,” which included Kazakhstan in the group of countries with “rapid growth of economy.”

The optimistic forecasts are connected with the fact that the global crisis undermined the economies of developed countries. There is another trend in the last decade: third world countries have demonstrated high GDP growth. According to experts, in 2011-2050, economic growth in industrialised countries will be 2 percent or less, while a corresponding figure in developing countries, including Kazakhstan, will reach 4 percent or more.

The trend promises to reduce the gap between rich and poor nations.

“The World in 2050” also included our neighbours in the region, Uzbekistan and Turkmenistan, in the group of countries with “rapidly growing economies.” This is another approach to Central Asia. If experts previously perceived it as a bunch of social and political problems, the report presents it as a next dynamic centre of the global economy. This conclusion simplifies the tasks of Kazakhstan, including on gaining membership in 30 leading countries of the world, since the capacity of the economy can be reinforced by regional development. For this purpose, it is necessary to strengthen stability in Central Asia and the trust between its peoples and facilitate trade between the region’s countries.

This means that we must continue our socio-economic reforms.

The road to leadership

“The nature and depth of transformations taking place in the world, the global interdependence, require long-term sustainable development. Many countries are already trying to look deep into the future, to the period after 2050, and a controlled prediction is becoming an important tool in development in our unstable time,” Nazarbayev said in the address. Strategy Kazakhstan 2050 implies a greater material well-being and quality of life of citizens. As was noted above, in the 21st century, the pace of the global economy will be set by developing countries, where GDP growth will be much higher than in industrialised countries.

According to expert estimates, by the middle of this century China will become the world economic leader, leaving the US behind. Nevertheless, it will take more time for China to catch up with the US on the quality of life of the population, as its population is so large. Consequently, China needs to maintain high rates of economic development. This century, Kazakhstan promises to draw ahead of China in terms of population income and quality of life.

A new model of social development offered last year by the head of state also makes its contribution to this process. A society of universal labour, on one hand, is the answer to the challenges of the global crisis, and on the other pursues the long-term development priorities of the country. Its most important aspect is the material well-being of citizens being closely related to their economically active position.

Finally, implementing Strategy Kazakhstan 2050 will show the leadership of our country on the world stage. It will create a halo of respectability and highlight the country’s competitiveness while also achieving a high standard of living for its people.

During the years of independence, Kazakhstan has become a significant player in the post-Soviet space, as evidenced by the integration processes, particularly the Customs Union and Common Economic Space, created on the initiative of our President. In addition, Astana had the honour of chairing the Organisation for Security and Cooperation in Europe (OSCE) and the Organisation of Islamic Cooperation (OIC), which indicates the high confidence of our foreign partners. And of course, our country remains a leader in the field of global nuclear security.

The author is chairman of the board of Atakent JSC and a member of the Almaty Maslikhat.

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