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The core features and promising directions of the “Kazakhstan-2050” Strategy

The core features and promising directions of the “Kazakhstan-2050” Strategy - e-history.kz
The prime objective of a Strategy is to create the Welfare Society on basis of a strong state, advanced economy and opportunities of Universal labor by 2050.

The core features and promising directions of the “Kazakhstan-2050” Strategy

Yesspayev S.S. – Director ISSC of the MES of

Republic of Kazakhstan,

Dr. Sc. Economics

The prime objective of a Strategy is to create the Welfare Society on basis of a strong state, advanced economy and opportunities of Universal labor by 2050. In this regard I think it expedient to fix upon the Letter’s core features and promising directions:

First, the economic policy of a new course is an economic pragmatism on the principles of profitability, return on investments and competitive ability. All decisions should be accepted from the standpoint of   economic expediency and long-term concerns. For this purpose it is needed to define the new points of economic growth and new market niches, wherein our republic may be involved as an equal right business-partner.

At that the  modernization of  macroeconomic policy includes: the new principles of budgetary policy – to expend only within one’s compass, reduce the budget deficit; sparingly and circumspect budgetary-financial process; the state budget investing to capital-productive nationwide projects with a long-term outlook.

In the area of tax policy, as the Head of the state has pointed out, it is necessary to check out all the tax preferences in force; liberalize the administrative power; facilitate and minimize the tax returns; pass on the full mode of e-accounting; to implement the practice of tax reduction and exemptions for the companies and citizens, putting up the capital in to education and medical care insurance. The tax policy will be applied towards the creation of a favorable tax regime for the onjects, which are involved in the area of production and innovative technologies and minimization of tax returns.

The effectiveness of neo industrialization and economic pragmatism policy depends on the concerted actions of private and public sectors, on the buildup of effective national clusters and mechanisms of its cooperation, which largely depend on the level of scientific rationale and adequate valuation of potential opportunities for the setting of goals and key indicators of industrial development. In this respect it is necessary to vest in realization of a new model of “competitive market”. On that basis, in the process of construction of a new model, which generally has a enough complex configuration, it primarily needs to determine and arrange the goals in order of importance. Herewith it needs to rest upon the internal resource, scientific and technological, technical, industrial and innovative sources. The country faces the challenge of a new industrialization, which is highly complicated and resource-intensive.

Thereupon it is necessary to improve the procedures of scheduling and implementation of budgetary investment projects. The need of republican budget integration in to the general macroeconomic structure becomes more and more obvious and clear, however, it is not possible to direct this integration on the beam. Heretofore the main attention and forces are gone to the current affairs, and there are no mechanisms of  state monetary policy measures inclusion in to the medium-term period,  whereat it was paid the special attention in the President’s Letter the “Kazakhstan-2050” Strategy.

The power of a center and regions in a part of investment project implementation are also not delimited. At that following the results of republican budget execution of 2012 it is expressly hard to escape a conclusion on insufficient elaboration of questions of the planning system at large, which includes the budget request formation. Despite the implemented reforms such questions as the transparency of budget planning, appraisal and determination of evaluation criterion for the government agencies, state holdings activity, target codes, etc. are kept as a problem. Besides, from one year to the next there are accretive amounts of non realization of budgetary funds, what primarily is indicative of necessity of careful study and carrying out of measures on the improvement of system of planning, training of relevant employees in state agencies and supporting of transparency.

For this reason on a legislative level the elaboration of single criterion for the selection of investment offers (projects)  is required upon the relevant branches, whereto the purposeful transfers are allotted (the water supply, roads, including in rural localities, education, the public health service, the social security, etc.). Herewith on a republican level it is necessary to form a methodological foundation for the planning of investment projects by one amount. These efforts should be accomplished in short order before the budgeting to 2014-2016.

In the period of economic slack it is recommended to carry out the new fiscal policy, which involves the budget cost minimization and reduction of tax burden to the economy. On retention of respectively high tax rates the high probability of  business loss arises, what leads to the decrease in production, unemployment rise, the social strain rise, and in the long-term perspective- to the  decline in tax revenues. Besides under such conditions the risk of the shadow economy share increase goes up with a jump.

The tax revenues in the budget’s revenue side compose more than 80%. The large proportion of which are the revenue on VAT. Taking this into account it is necessary to point out that hereafter it should be deviated from the VAT zero rate. It is better to use the mechanism of immunity from VAT, than to return these amounts from the budget, what is of prime importance in conditions of creating of a Custom union and CES. The zero rate of VAT conduces the corruption and subjectivity, what is impermissible under the conditions of a crisis and administrative reform. More importantly, the given method promotes the financial resources loss from the state budget. The VAT recovery at the present time is applied essentially for the raw materials, but it would be better to use this method only to the commodities with high value added and to solve this issue on basis of Tax Code improvement. Also for the priming of economy under the conditions of crisis the VAT can be replaced with the sales tax.

Besides at the increase of burden on income tax the aspiration to hide its genuine size is strengthening for the purpose of understatement of tax base, to transfer income in the other forms (increase of material costs, salaries, etc.). If the heaviness of tax burden shifts aside the property tax and resource-rental payments, so although the income of enterprise remains as the source for these taxes, the meaning in its concealment is lost, because the cost of property is a tax assessment base for them, and for the resource-rental payments – the production output (in monetary or natural terms). The well-designed property taxes and resource-rental payments stimulate the effective capital flow and promote the dynamic economic restructuring, within certain limits ensure the government receipts regardless of the enterprises operating results.

In the long term it is recommended to pull in the specification of taxes and fees, reduce the direct taxes.  The taxes should create the conditions for the development of manufacturers, inspire the renewal of reinvestments funds to national economy.  The benefit should be mutual:  either for the tax payers, or the state. In a word from our point of view the  taxation system is elaborated without the compatibility with the macroeconomic indicators and does not take into account the multiplication connection of taxes with the investments, government expenditures, etc. Upon the various positions it would be well to carry out the approbation in practice, calculate the estimated figures and expected results, which to wide extent would raise its authenticity and efficiency.

Second, Kazakhstan by 2050 should be in the thirty most developed economies and the following major objectives are to be defined:further development and consolidation of the statehood;  pass to the new principles of economic policy; all-round support of entrepreneurship – the leading force of national economy; the formation of a new social model; creation of modern and effective system of education and public health service; rise of responsibility, effectiveness and functionality of state machinery; the forming up of foreign and defense policies adequate to the new challenges.

The President has directed to establish the joint ventures in a region and world, having developed the “Global infrastructure integration” special program. The government program on infrastructure development, providing the creation of infrastructure centers up country and outrunning the infrastructures of transport system will be elaborated and accepted in 2013. 

The absolute priority in the republic’s economic policy is placed on the issues of industrial-innovation development. The government program on the accelerated industrial-innovative development will be hinged on the import of industrial capacities and technological exchange. For that end we need a subprogram on the establishing and development of joint international companies and partnerships beneficial for the country. As a consequence the share of non-resource export in the total volume of export should increase twofold by 2025 and thrice by 2040.

In order to create an infrastructure it is recommended:

1.The build-up of export-processing zones in relevant regions, which will become a first stage of the country export industrialization;

2. One of the organizational forms, which are designed to promote the accelerated investment generation in to the non-resource branches of economy, is a foundation of the free economic zones (further –the FEZ) with the special treatment of a free custom zone. In this context we propose for the FEZ by law in the period of mastery of innovation solutions by them to define the decrease of the amount of estimated corporate income tax and its tax exemption from the deduction of property and land tax;

3. The special attention by the Head of the state is paid to the formation of national clusters. The major objectives of the Kazakhstani cluster initiative are the creation of first-order conditions for the maximal use of the country’s competitive advantages in aid of the non-resource economy sectors development on basis of the business structures involving and a competitive growth of domestic enterprises. The clusters should be formed on a regional basis, wherein the strong concentration of interrelated branches is observed. The other approach is to grant to the main economic regions and cities the status of special zones, wherein the foreign investors will be provided with the exceptional treatments if they will expand the specific industrial clusters;

4. In the age of globalization the competitive ability of regions and country can provide not the separate (though the large an technologically developed ones) enterprises, but the system of economic entities, interconnected by the close-bodied economic relations. Kazakhstan having the vast territorial disunity of manufacture, ample mineral resources base, the large squares of farming lands and a little degree of indigenous population urbanization, has need of the formation of national clusters, which are able effectively modify the content of state industrial policy. In this case the efforts should be directed not to the support of  indivifual enterprises and fileds, but to the development of relations: between the suppliers and consumers, end users and producers, producers themselves and the institutes for development, etc.

5. In the context of innovative ventures development it needs to organize the  innovative-technological clusters (ITC) in the regions, which should perform the following functions: establishing of technologic companies and its support at the initial stage, because the ITC will provide the continuous support in business management, access to financing,  complex of necessaries and technical support, including the assistance in business planning, drawing up of innovative projects, marketing plans, in the bookkeeping and legal issues. According to the world practice, the ITC give a “quick” start to enterprises, by speeding up its development in 7-12 times in comparison with the enterprises, which operate in any other place.

From the perspective of innovation process management the creation of ITC network will allow: concentrate the necessary physical resources for the grant financing of enterprises inside the territory of innovative-technological centers (ITC); rapidly accept the managerial decisions which allow to constrict the period of innovation cycle; to lower the level of overhead costs to the infrastructure maintenance; to scale back the number of bureaucratic procedures in the process of investment decisions making; to optimize the management structures of innovation enterprises; to create the condition for the exchange and transfer of knowledge in the innovation system. The selection of companies and innovative entrepreneurs for the work in the ITC should be carried out on competition basis, as a competition of projects, ideas, regardless of the applicant personality.

6. The special attention should be paid to the technology transfer (transfer, commercialization of research and development to the industrial sector). It is necessary to initiate the project on centers of excellence creation. The created centers of excellence will provide the support of innovative solutions in the given branches byway of rendering of technologic, financial, legal and organizational assistance.

 7. It needs to elaborate the new Strategy of  neo industrialization and modernization of the top-priority branches of economy before 2020 on basis of the specific measures of interindustrial development, supply of methods and technologies, staff assistance, state backing and stimulation, creation of relevant infrastructures, particularly in the manufacturing and processing industries and development of domestic markets with specification of its terms and executives in charge, organizational and technical elements of implementation. In our opinion, so only it is possible to implement the new innovation in the country.

It is specified in the Letter about the necessity of the elaboration of “road maps” on the formation of promising national clusters. The “ЕХРО-2017” should give an incentive to this process and assist in the selection of the latest technologies for the development of the power industry of the future.

Third, in the Letter of the Head of state N.A.Nazarbayev “Strategy-2050” the need of carrying out of the entrepreneurship all-round support is mentioned: foremost,  by way of encouragement of small and medium business to association and cooperation; secondly, by the introduction of amendments to legislation, directed to the delimitation of concepts of micro-, small, medium and big business. It is planned to increase the share of small and medium business leastwise twofold by 2030.

For this purpose the necessary normative legal acts are created within a country. For example, in June 2012 the Parliament of Republic of Kazakhstan has adopted the Law “About the introduction of amendments and additions to some legislative acts of Republic of Kazakhstan regarding the reduction of authorization documents and optimization of monitoring and oversight functions of state agencies”, which was elaborated by order of the Head of state. The given Law imposes ban on the carrying out by the state agencies of scheduled checks for the new business entities for a term of 3 years from the moment of registration. Also the further reduction of all the licenses and permission is formalized in legislation. On the matter the Government was charged till the end of the first half of the 2013 to cancel all the permits and licenses, which broadly do not affect the safety of Kazakhstan citizens’ vital activity, and replace to the notices.

Our positions continue brighten also in the international ratings. So, according to the “Doing Business 2012” World Bank rating Kazakhstan has shifted to 47 place and therethrough has joined the ranks of   50 countries with the most business-enabling environment. The private enterprise is a “cornerstone” for the development of economic processes and sustainable development in the most developed countries. Particularly it is necessary to lay emphasis on the characteristic of the SME to create and implement the innovations, which become the crucial instrument of competition at the global markets. Thus in the EU countries, USA, Japan the share of  innovation enterprises composes about 40 % of the total number of SME companies. The comparative study on the development of Kazakhstan SME sector demonstrates the noticeable slippage of our country over such indices as the SME contribution into GDP and the employment of population.

To our opinion, the comparative slippage on the indices of economic and social efficiency of Kazakhstan SME from the economically developed countries shows that there is a high potential for the further development of domestic entrepreneurship. Upon the sectoral structure the SME of Kazakhstan also has some distinctions from the developed countries. If the SME subjects in our country generally operate in the area of wholesale and retain business  – its share equals 41%, then in the economically developed countries the SME structure upon the economy branches looks in other way. In this regard the question of the SME sector diversification remains currently central the problems and reasons of non-fulfillment of target goals by the entrepreneurs diverge: 41% of entrepreneurs think it happens on a stage of receiving of loan, 27% – that the reason is the insufficient amount of finance, received as a loan, 14% – the duration of the application processing by the bank. In whole it needs to note that the SME in Kazakhstan is developing with the numerous risks and differ by own complexity. In such a manner taking into account the problems marked and international practice it is possible to detach the following proposals for the SME development and employment providing:

1.  to expand the instruments of state backing (project financing, grants) with increase of subsidy assistance percent, increase of loan term and subsidy assistance. Among the instruments of support, which are to be included are the lease financing. For the purpose of application pendency process improvement it is to cut back on the length and the process of project review. It needs to consider the question of reexamination of tax assessment for the SME, dealing with the priority-oriented manufacture, considerably reduce the taxes in an aggregate amount to 6-8%.

2. The state should approve the special List of goods and services, production of which is not organized in the republic (Top-priority manufacture), and the SME subjects, operating in indicated top-priority areas, should receive the concessional long-term loans by experience of Germany. It is possible to foresee the credit repayment also in natural form (in goods and services). The risk of non-return loan can be mitigated through the deposit refund system or in case of collateralized property absence – through the projects co-funding (50/50).

3. For purposes of Kazakhstan innovative system improvement  it is necessary to put the essential emphasis on the formation of a government order on innovative products and attracting of highly-qualified personnel for the elaboration and implementation of modern ideas in different economy branches.

4. The effective measure of public support of SME should become the organization of public purchases of stated goods according to the list approved by the Government with  the conclusion of long-term contracts with them, what will form the guaranteed demand and provide the support for the business.  All this can be organized through the special clusters, which should directly deal with the SME development in relevant regions by way of provision of information about the  projects which are planned for the implementation, possibility of  ancillary manufacture creation; the single-purpose working with the SME representatives and advising on projects implementation.

5. At the same time the questions on informational and scientific-methodological provision of SME are still not resolved. This function could exercise the regional  special clusters, which should directly deal with the SME development in the relevant regions by way of: formation and the advertising of business projects, which are the most attractive for the implementation in the given region; information sharing about the project which are already implemented or planned for the implementation by the government, possibility of auxiliary manufacture establishing; the single-purpose working with the SME representatives, advising on the projects implementation and taxation, etc.

Fourth, the further consolidation of the statehood and development of Kazakhstani democracy, i.e.– to form the new type of public administration, which conform to the new goals of being in the employ of society and consolidation of the statehood. For this end it needs to improve the systems of state planning and forecasting; to strengthen responsibility of government agencies for the drawing up of plans and programs; establish an overall system of a public audit on basis of advanced global experience, elaborate and create a new Law.

The Head of state has particularly pointed out about the necessity of properly carrying out of management decentralization and speed up the elaboration and acceptance of necessary legislative acts on the questions of local government development, including the electivity of rural akims; on the delineation of authority between the state administrative bodies, having strengthen the requisite powers of the local executive agencies; to hold election of rural akims the current year; continue the policy on the Parliament strengthening with powers.

It should be emphasize that the managerial decisions at the state level should meet the following requirements: the recording of not only the short-term but the long-term results; recording of  a multiplicative effect of managerial decision; provision of a fair competition and freedom of enterprise rules.

Under the circumstances it needs to create a national framework of strategic planning and management. For that end it is necessary to elaborate the systems of strategic, forecast-planned documents, the presence of which would presently allow to develop measures on innovation-driven growth in an expeditious manner byway of adjustment of alterations in internal and external conditions of domestic economy functioning. In this regard  it is reasonable to elaborate and accept as a matter of priority the draft Law “About the priorities of Kazakhstan economic policy”, which will allow to provide the coordination of elaboration and implementation of long-term strategies, the development program for the country in whole, for the regions, economy branches, its mutual connection on targets, terms and measures, directed toward the implementation. For example the draft Law “About the government strategic planning of social and economic development” is already elaborated in Russia. The legislative regulation of economic development problems includes the venture management on the aspects of the production and economic activities. At that  the determination of frame conditions for the regulation of top priorities of economic diversity is proposed.

Besides the doubling of state functions still takes place, what leads to the disorder and blurring in the questions of responsibility, untenable spending of financial assets, performed state functions and services provided quality loss. Also the civic and local government institutions are undeveloped. The following distinctive features are inherent to the present system: the ministries management, oblast akimats have an extra concentration of authority; the co subordination of local structural subdivisions of ministries and agencies to the oblast akims.

The presence of these peculiarities makes the management system unmanageable, weakly governed, not conforming the international standards. Several circumstances encumber the perfection of management system: extensively engrained belief that the reallocation of functions, and equally the responsibility will lead to the lowering of management quality; presence of managerial stereotypes, which were raised way back in the Soviet period. It is characteristic that in the currently implemented administrative reform not the indirect but the vertical co subordination of the command chains retained as a matter of fact. Many senior managers conceive the local administration not as the element of integrated management system, whom the state has delegated the functions and corresponding budgetary funds, but as the extemporary activity of large sections of the public. Therefore we think expedient to complete the work on delineation of authority between the levels of public administration.

Also it should not go unspoken about many other accumulated problems in the economy management. Particularly, the complex hierarchical control system takes place. The Ministries, committees, its departments  in center and on sites, state holdings, its numerous “subsidiaries”, “lower-tier subsidiaries”, national companies, social-entrepreneurial corporations, etc. The number of control links composes 5-6 and even more. This significantly extends and complicates the process of decision making, and its bringing to performers. All this cannot but have an impact on efficient response of decisions accepted and efficiency of performance. Both the ministries and branches require the optimization. Thus, it is possible to establish the Ministry on protection of business competition and consumer rights, as part of which: the Committee on regulation of natural and state monopolies (at present ARNP); the Committee on protection of business competition (at present APC) and a service on consumer rights protection (still there is a government body in charge of public policy in the area of consumer rights protection) may be.

It is necessary to elaborate the Concept of the state ownership and national property management. Within a framework of this concept emerges the possibility for the study of megaholdings existence feasibility, reform its work in a quality manner. It is required to revise the tasks and objectives of institutes for development created, in particular the criteria for its performance appraisal. At the present time the essential criterion of appraisal of institutes of development activity is a profitability of its work. In this regard   they are no different from the second-tier banks, except that annually capitalized out of public funds. Its activity should be appraised upon the stage of involvement in real diversification of Kazakhstani economy, implementation of investment projects, extent of real support of domestic economy.

According to represented data almost 35% of republican government enterprises, JSCs and LLPs, as also more than 85% of community property facilities are lossmaking or have a zero result of financial and economic activities. Besides, considering the fact that the part of public proprietary facilities are employed in social sphere, agriculture and housing and public utilities, wherein the most lossmaking facilities operate, it is necessary to elaborate the distinct criteria for the evaluation of socioeconomic effect from the activity of government enterprises, JSCs and LLPs.

In this regard the classification of existing government organizations on the grounds of strategic, social and commercial orientation and carrying out of a steady monitoring of its work with respect to specificity and purposive appointment seems advisable. Herewith the strategic and social facilities should be appraised more on final results of its performance, and the commercial – on financial results. Besides the number of commercial facilities should be limited to the maximum, and in accordance with the results of steady monitoring the proposals on the possibility of the given facilities transfer in to the competitive environment should be made, i.e. the privatization on conditions beneficial for the state at market price.

In China in the buildup of civilized market economy the key place is occupied by the complex system of macroeconomic control. This control includes three general provisions: abandoning of administration management methods and transition to the regulation by virtue of economic instruments; creation of an integrated system of macro control; establishing of communication between the control and market mechanisms.

Fifth, “Our goal is to be a part of global technologic revolution”, - has called the President of Kazakhstan, having charged to take measures on the full-fledged cooperation of science and business as early as in 2013. In our opinion it is the main thing for scientific workers.

Of special note is a new policy of innovation research development, i.e.it is necessary to take measures on a full-fledged cooperation of science and business. In this regard it needs to note that the Kazakhstani science also should get oriented to the economy needs. The President has stated two critical goals – to make our researches of international standards and provide a direct connection of science to innovation process.

Herewith the essential factor restricting the rise of innovative diligence is an insufficient adherence to the systemacity principle, which consist in discrete proportionality of innovation and production spheres on the following directions: 1) the gap between the science and manufacture, between the republic’s technological development and world technological level is preserved; 2) the Strategy of technological development is absent. In the process of elaboration it is necessary to correspond with the State program of accelerated industrial-innovation development; 3) the economic mechanism which stimulate a participation of private capital in the development of science and innovations are absent; 4) the low level of expenditures to research and development works, weak end-item orientation, the manufacturing application of new products, new merchantable technologies; 5) the infrastructure underdevelopment and others.

In this regard we recommend the following proposals|:

1. It is necessary to revise the criteria and indicators of innovation activity, distinctly define the characteristics of innovative products for the purpose of state support rendering, as also for use in statistics and analysis. The determination of primary directions in the industry-specific and inter-industry innovation policy in the republic should be carried out on basis of previously elaborated scenarios of future development, wherein the industry condition is analyzed and the realistic long-term and short-term, strategic and tactical targets are determined.

Herewith it is necessary to give a special consideration to the ranking of goals on the importance and keep the accounts of real resources, which the industry possesses. The policy should be directed to the development of such branches, where there are certain achievements. To our opinion on such key growth directions of science and technology, as electronics, informational and communication technologies, novel materials, bioengineering, power economy, space technologies the research and development should be carried out on a mandatory basis.

2. The system of  management and administration of scientific activities should be redirected from the work on the principle of “scientist-official-scientist” to the “business  – official – scientist–business” principle. It needs to change the science financing structure by the following ratio – fundamental research 20%, applied research 30%, design and development works- 50%.

It should be emphasized that the logic chain : science → development and engineering or experimental-technologic activity for the creation of novel technologies, machinery, equipment through the science results use (scientific and technological activities) → commercialization of R&D deliverables (innovation activity) is taken as a basis of scientific and technical development process in the highly developed countries.

3. It is necessary to create a new information resource “The base of real sector needs”, wherein the findings of industrial organizations inspection, including the enterprises needs and the ways of solution (research organizations and ready-made technology solutions, which have a potential of business needs satisfaction) will be balanced. All these measures are to be set aside in the relevant legislative acts of the country.

4. The research on the scientific and technological forecast, the world and national innovative markets state analysis, prospects of technological development and efficiency of the conducted innovation policy (with the involvement of the best foreign and native experts) are to be conducted on an annual base, and the  specific recommendations which includes the recommendations on elaboration of relevant regulatory legal acts are to be submitted.

In this regard we recommend to bring in the ranking score on the activity of central and local executive agencies, stated-owned companies, national holdings, SRI and HEI on the innovative-technologic development in view of branches and regions.

5. For the purposes of direct support of innovative activities we recommend to elaborate the Technological scheme of economic sectors development, wherein the  goals upon reaching of a defined level of technological development of national companies and large enterprises should be reflected, as also the possibilities for the introduction of native scientific, innovation, and production organizations to this process; to implement an integrated propagandist activity inclusive the carrying out of PR-strategy, contests among the youth and enterprises’ employees, businessmen, workshops, exhibitions, congresses and other events, which shape a golden opinion of population about the innovations and innovators.

The specific character of venture capital should be in the picture of tax legislation, i.e. it is necessary to provide the possibility of income deductions on the part of institutional investors’ funds, attracted by the venture investment funds. For that end in the Tax Code, together with the provided deductions on allocation to reserve funds of subsoil users and banks, it is useful to provide the possibility of deductions on investors’ reserves, which is created with the purpose of innovation activities risks hedging.

Also it is necessary to take measures on the well-balanced financing of a research scientific work; gradual increase of annual volume of financing by 2015, including the mechanism of private investment attraction; implementation of scientific and technological programs on the priority-oriented scientific fields for the generation of competitive results and its efficient use. The research should be redirected to the receipt of salable scientific products. In the national research centers it is necessary to create the production and service complexes, which serve the scientific work processes. The design and construction departments (institutes) should evolve.

It is necessary to formalize legislatively the norms on the provision of: protection and use of intellectual property, which promote the incitement of creation, valuation and use of intellectual property in the scientific and technological sphere; expansion of business participation in the research activities, including the national companies, by way of implementation of intervention mechanisms for the joint scientific and technological programs, co-financing of scientific projects and creation of incentive mechanisms for the private sectors; training and engaging of new generation of highly skilled scientific and engineering personnel.

The social status of science employees requires perfection and taking of specific measures, i.e. the working-out of employment benefits, providing the measures of the science officer status rise, including the extra charges increase for a degree level, determination of multiplying coefficients to the salary for high levels of a science officer rating, etc.

In this regard it is useful to elaborate and accept the new Law “About the scientific, scientific and technological and innovative activities”. It is noteworthy that there are the “Federal act concerning science and state scientific and technical policy” in Russian Federation and an “Act of Ukraine about the sciential and scientific and technological activities”.

  The analysis of retardation of innovation activity growth at the observed rapid development of economy in the first decade of 21 century has testified that for the growth of  innovative activity in the scientific and business environment in the first place it is necessary to create a minimum requirement (critical) level of technical and technologic effectiveness of economy, as a main base of orders, consumption and generation of innovations.

It is necessary to conduct investigations on scientific and technological forecasting, analysis of the world and national innovative market state and perspectives of technological development of the conducted innovation policy effectiveness ежегодно (engaging the best foreign and native experts) on an annual base, and submit the specific recommendations, of which on the elaboration of relevant regulatory legal acts.

It is worth noting that practically at all developed industrial countries have a system of state stimulation of SME innovative activities. So in France having verified that the small and medium companies activity increase has an impact on the growth of international competitiveness of a country they implement specific programs of support for innovation enterprises by way of participation in costs by means of donations, tax preferences, concessional loans, venture capital  and advising. China demonstrates the most shining example of successful innovation policy, particularly for the purpose of SME development.