Shedenov U.K.
Regional Aspects of Integrated Development of the Economy of the Republic of Kazakhstan under the Transition Period to the Market Relations.
Journal "Vestnik KazGU". Serial of Economic Siences. Almaty, Kazakhstan, 1999, 1.

Stabilization of the economy of the republic during the period of its reforming is defined by the way how the economy of every region will be adapted to new market relations. It is known that all the regions of the RK after the collapse of the USSR have had their own specializations.

For example, this or that branch of industry (oil and gas industry, ferrous and non-ferrous metallurgy, electroenergy, chemical and others) has been developed in one region, and this or that branch of agriculture (plant-growing and stock-breeding) has been developed in another. There are also some regions with a rather diversified departmental structure. But the inefficient departmental structure and the low level of integration remained characteristic of the national economies of all the regions.

Every segment organizing production and other activities on the given territory tried to use at maximum the regional conditions and factors following only his own interests, not taking care of the effective development of the whole economic complex, of the final results of the regional economy, and, finally, of the living standards of the population.

On the other hand, the present economic situation in the RK shows that the reduction of the inflation rate cannot and doesnt lead to the stable economic growth; the promised flow of foreign investments has just started to be received; the local investments have fallen down to the critical level; the spare money of the people and of private businesses is not being invested into material production but circulating in the sphere of commercial business (trade) and banking transactions. For the Republic of Kazakhstan such kind of situation is not desirable and cannot last long; its economy cannot be based on the export expansion only, i.e. on the export of fuel and raw materials in exchange for consumer goods. Such a situation may enable it to be on float only for some time more, but in no case it will lead the country to the stable economic growth.

The stable economic growth may be based only on the scientific and technical progress and development of the branches of industry, using high-tech and "know-how". The drive of the government to increase the export potential relying only upon oil, gas and metals cannot be economically justified. Furthermore, the earned money will not be invested in the production sphere. Under the existing conditions it is necessary to undertake measures on adapting the economy of the country to the market relations. And it is likely to be correct to develop the domestic (home) market, to protect it from unfair competition of the imported goods from foreign and CIS countries by rewarding local investments, to render assistance selectively to the vitally important enterprises and to some definite regions for making them competitive.

It can be achieved only on the basis of promoting the economic integration of the regions of the republic. Indeed, speeding up the development of the regional interrelations and the creation, at the reasonable level, of the closed cycles of production and consumption, i.e. first of all, the balance of production and consumption, which withdraws optimally into the territory of the city, region, can increase the level of integrated development and ensure protection from the transportation costs and from the increase of customs duties. The upsurge of the level of integration of the economies of the regions is the necessity for smoothing over the existing disproportions in its structure.

Thats why the integrated development of the regions economies of the country becomes the more important factor of adapting its economy, as a whole, to the market, for it is aimed, first of all at creating such a complex of branches and production that will be able to cover the costs and expenses for creating favourable conditions for economic activities and for living on of the population; secondly, at changes in the interregional relations towards the reduction and later to the complete elimination of the non-equivalent exchange of means between each other and expansion of the economic balance and independence in the region; thirdly, at the development of the system of reimbursement between the regional bodies of management, on the one hand, and between enterprises, institutions and organizations with different forms of ownership, on the other hand, while utilizing the regional resources-infrastructural, natural and labor; fourthly, at the expansion of the capacity of the economic activities within the jurisdiction of the territorial bodies.

The issues of reconstructing the economic complex that will enable the creation of the efficiently operating reproduction process on the relevant territory, envisage the change of the functions of the regional management: the formation of the market relations considers the function of the scientific substitution of the level of participating of the region in the territorial labor division as one of the most important functions, as well as the rational proportions in the region between production and non-production spheres, between branches and productions of the material sphere, between accumulation and consumption and so forth.

On the basis of this suggestion, the most important function of the regional management may be implemented, namely, ensuring the general conditions of the economic activity and the achievement of the appropriate level and quality of the living standards of the population living on the territory.

As far as small businesses are concerned, they are relatively less connected with the state control and regulation, because they are operating under the conditions of high competitiveness and are mobile enough.

But the role of small businesses in rising the complex economic activity is rather high. It lies in the fact that being independent and non-governmental enterprises, abiding the laws of the market, they promote the saturation of the domestic market with consumer goods, food stuffs, spare parts and so on. And at the same time they start interacting with large and mid-size enterprises as affiliates and joint ventures, growing into the economic complex of the region.

Of course, the formation of the effective economic complex on the territory under the market conditions cannot be developed spontaneously. The regional management presupposes the scientific substitution of the process of improvement of the territorial organization of the economy for solving the interrelated problems, and, first of all, for choosing the priorities in the formation of the effective complex, the complex economic diagnosis of the regional factors and conditions, the economic potential as a whole and revealing of inefficient production that decreases the volume of the aggregate income in the region, and so on.

Not a less considerable role in rising the efficiency of the industrial structure of the region is given to the forms of organizing production. At present in the regions with a high industrial level, the more developed forms of the financial-industrial groups are being spread, that combine production on the technological chain and produce the complete product.

In the financial-industrial groups the principle of forming the reasonable proportion between separate productions on the territory that enables to smooth over the negative factors influencing the production recession under the transition period to the market (monopolism, lack of the working capital of enterprises and so on).

Thus, it is desirable to transfer from macroeconomic reforms, that are necessary and important but not influencing the vertical and horizontal aspects of social and economic relations, where the productive forces are functioning, where the goods and services are produced, to the microeconomic regulation, focusing on the fact how and to what extent the resources and conditions of the territory are used by the production logistics. Such kind of approach may ensure the real way out of the crisis, stabilize the core of the economy, i.e. industry, on the basis of its integrated development.

So, some definite regions of Kazakhstan have decided that the more complete use of the potential of the oblast and its regions, activization of the regional factors and the sources of the economic growth, mobilization of internal resources and enhancing the activities and responsibilities of local bodies of power, are to be among the basic tasks of the program on deepening reforms.

The outlined slowing down of the inflation rate has not made any impact on the cost proportions, it is still instable of non-payments and growth of debts both at the level of enterprises and the state.

Under the market conditions price correlations are the main regulators of the production activities of enterprises in the formation of the logistics ratio.

But non-payments destroy the whole mechanism of maintaining these proportions. Naturalization of exchanges through barter operations, carrying out of the greater part of payments by using money substitutes tax privileges, bills of exchange, cash, passing over the banks expands the possibilities to conceal incomes and to evade taxes. Such kind of situation makes it difficult to analyse the process of integrated development of the economy from the point of its efficiency, especially in the field of processing compared with extractive branches of industry. As a result, the transition to the market on the first stage of reforms weakened considerably the balance of the logistics ratio.

But the balance regaining of the national economy on the territory is extremely important, because the main direction of the work and the criterion of the efficiency must become the increase of the satisfaction level of the social and economic needs of the population living on the relevant territory on the basis of its integrated development and considerable diversification of branches of the economic structure. The more independence the regions gain, the more interests and responsibilities appear.

Though these interests are only one part of the motivation factors, they are the basis of the economic activities because they are realized on the definite territory under the specific conditions.

Regional interests are, first of all, the elaboration of appropriate programs and using of different stimuli that provide a stable nature of reproduction and enhancement of the regions potential. The main indicators (parameters) of the regional interests are: conformity of the level and mode of life of the population to the state and other standards; natural and ecological potential of the region; the existence of the infrastructure for the development of internal and interregional relations; the existence of the budget and financial and other material sources (property and so on) that are able to ensure the development of public production; the level of development of the sectoral structure of the economy, including the industry of the regions; the physical amount of the surplus product received on the territory and necessary for going on of the extended reproduction process; potential possibilities for utilizing these resources, labor places, and intellect; and the stability of public and political, and national and ethnical situation.

More over, regional interests mustnt contradict the general direction of reforming, i.e. they must be in conformity with the common state interests.

But it should be noted that the following characteristic features are inherent in the regional economy being the linking level between macro and microeconomic levels: first, it cannot be regarded as an isolated part of the economic complex, it has the definite borders of economic independence; secondly, to a greater extent, the level of its development is dependent of the climatic and natural factors and the environmental situation; thirdly, the regional economy, being integrated, is not so harmonious.

As the practice of the former economy shows, many regions of Kazakhstan turned out to be tightly specialized in this or that sphere of activity.

Thus, the formation of the effective economic complex on the definite territory has become a new function of the regional bodies of management. A successful solution of this task will help extricate the country out of the crisis by eliminating the interdepartmental or sectoral disproportions, by choosing the more effective sales markets and by importing goods, positively influencing the process of adaptation of the economy to the market as a whole.

The more freely the economic entity within the framework of the common economic mechanism can dispose of its resources, the higher the efficiency of the regional management will be. Under the tough system of management the process of feedback may be destroyed and the system fails to carry out the economic selfregulation. In such conditions it becomes necessary to work out the appropriate system of the regional management, but the functions of management between the regional and republican bodies must be strictly differentiated.

The objective tendencies of the development of self-government show the necessity of delegating some part of power and responsibilities to the regions. Because only at the regional level a complete cycle of reproduction of labor resources, including engineering and scientific personnel, may take place.

But it shouldnt be understood that the market will be able to determine automatically the character and dynamics of the territorial processes. The market has its own functions and tasks. What is more, under certain conditions the development of market relations may lead to the aggravation of the regional problems (including the spheres of the social and ecological protection). Thats why the idea of the regional development has become generally recognized but it should be kept in mind all the time that being an integral part of the state activities, all the territorial problems should be settled within the framework of the social and economic policy of the state. The normative and legal foundation of the state, relevant state programs influence, to this or that extent, the level of the efficient integrated development of the economy. In the countries with the developed market economy the regional economy presents itself as a result of compromises between economic and social tasks and objectives of a society development, i.e. the private sector is in charge of solving the former and the state of the latter. And, as a result, the more effective rational economic complex may be established on the territory.

On the other hand, the enhancement of the integrated development of the economy of the regions should be based on the expansion of employment, development of economic initiatives and elimination of all kinds of impediments that hinder the labor productivity growth and the product quality growth. In order to be a success in fulfilling this task, all the citizens must be interested in the processes of management.

It is natural that the expansion on the part of the state of the sphere of operating for free competitiveness and commodity production is an important function of the state under the transition period to the market. It is directly connected with the formation of the effective economic complex, its reconstruction at the expense of the liquidation of inefficient sectors and productions and the development of new, missing ones, that will boost the economy on the relevant territory, as a whole.

The economic stimuli, influencing the integrated development of the economy might be more effective, if they dont restrict the economic independence of all the entities at all levels. And it is obvious that the principle of preferences for the accumulation fund that provides the labor productivity growth, must become the main principle for carrying on the protectionist policy. Under such conditions it is necessary to have the regions leaders that will haul the economy of the entire republic ahead, the leaders in such a sense of the word, that are able to create material and spiritual goods, not traditional ones.