Technological Change, Network Building and Dynamic Competitiveness in the Engineering Industry in Kazakhstan

Abstract

The dynamic competitiveness of Kazakhstan's engineering-based firms is assessed on the basis of their prospects for technological evolution in terms of a simple, three-level taxonomy of goods — simple inputs/components, complex inputs/components and ‘specialist supplier goods’. On the assumption that real wages in Kazakhstan will grow steadily and significantly over the foreseeable future, Kazakhstan firms will be forced to move up the ‘technological ladder’ to maintain competitiveness. The article concludes that a number of the targeted firms show clear potential for dynamic competitiveness. None, however, is fulfilling all the conditions for dynamic competitiveness at the present time. One of the main underlying factors tending to weaken the competitiveness of Kazakhstan companies is a historically conditioned tendency to isolation, which has effectively excluded networking as it operates in the advanced industrial economies. While the importance of human capital and human capital formation is generally recognised in the targeted companies, public policy in this area is perceived as being highly ineffective, in a situation where the companies themselves do not have sufficient resources to fund all the training they need.

Notes

1. About Kazakhstan Franchise Association, [email protected].

2. Figure for 2002. This represented a 33% increase on 2001. See Kratkii… (2003, p. 135).

3. At present Kazakhstan imports annually some $2 billion worth of equipment, this accounting for some 30% of total imports. It can be assumed that the bulk of these imports go to the oil and gas industries.

4. Note that ISPAT does have plans to build a plant near Aktau, on the Caspian Sea, to manufacture large-diameter pipes for the oil and gas industry (see Tazhutov, 2003).

5. Confidential to the Ministry of Industry and Trade.

Additional information

Notes on contributors

David A. Dyker

This article is based on a study ‘Competitiveness in Engineering and Light Industry in Kazakhstan’, commissioned by the Asian Development Bank under technical assistance project TA 4027-KAZ Industrial Sector Review and Strategy. The author thanks the Bank for permission to reuse the material. He also thanks Aigul Kosherbaeva for help in preparing the original study.