ASTANA – Global consulting giant McKinsey introduced its upcoming book “No Ordinary Disruption: The Four Forces Breaking All the Trends” at a press conference in Astana’s Marriott hotel on Nov. 25.
As the bulk of economic activity shifts from the U.S. and Europe towards Asia, experts from the McKinsey Global Institute predict that Kazakhstan will become a centre of global economic gravity by 2050. According to experts, four factors significantly affect this change in the global economy and will require a change in Kazakhstan’s leadership’s management style.
“The centre of economic activity is shifting to the South and East and the role of Kazakhstan in the global economy will inevitably change as a result of the impact of the trends that are destroying the existing order and make the government and corporate executives change their ways of thinking and introduce new work methods,” says Richard Dobbs, one of the authors of the book and director of the McKinsey Global Institute.
The four challenges include rising growth and urbanisation in developing countries, accelerated technological change, greater global connections and an aging world.
As the centre of economic activity shifts towards Asia, the role of Kazakhstan will undoubtedly also undergo changes. According to Jukka Maksimainen, who manages the McKinsey office in Kazakhstan, the country needs to adapt to this new economic reality with a series of transformations.
Kazakhstan is a country with a fast developing economy and, therefore, plays a great role in this transformation. On the other hand, the change in the geo-economic situation affects the volume of sales for many companies that move freight from China to Europe and those that sell oil, gas and uranium.
Resource scarcity is also a challenge that the world will need to face in the coming future. Kazakhstan has vast amounts of arable land and natural resources, which put Kazakhstan in a great geopolitical position. But this places a great amount of responsibility on the country in regards to how efficiently these resources are used. One such resource is water, which is a scarce commodity in Kazakhstan.
According to McKinsey research, a great deal of disruption to the established order will be dealt by the development of digital technology. In this regard, Kazakhstan needs to increase its volume of investment into research and development. The country traditionally invests on average 0.2 percent of GDP a year in research and development, whereas other states spend 2.5 percent, which is 12 times more. In order to preserve its competitiveness, McKinsey suggests that the Samruk Kazyna Soverign Wealth Fund needs to effectively apply new technologies and participate in the advancement of technological know-how.
Another global game changer is the increasing age of the global population. Kazakhstan is a young and highly educated nation; a large segment of its population is economically active and part of a productive labour force. It also has lower pension requirements than developed countries. But Kazakhstan will need to make serious efforts to retain young specialists and keep them from headhunters from abroad. Kazakhstan will need to build world class cities and good infrastructure capable of attracting young people.
The final challenge for Kazakhstan will be the ongoing rise in global competition. Kazakhstan will need to battle for investment capital and in winning interest from leading partners in the global arena for new projects and acquiring privitisation assets.
“The country is already undertaking measures aimed at increasing efficiency in its domestic economy and has already entered the ranks of the 50 most competitive countries,” Maksimainen said.