The Main Problems of Economic Development of Kazakhstan's Regions

The economic framework of local governance The economic foundations of the local government of the Republic of Kazakhstan are: – Municipal property; – Local finance; – Property in state ownership and transferred to the management of local governments. The material and financial resources, which are the economic foundation of local government, determine in fact the efficiency of local government.

The economic foundation for local governance is a set of legal norms that regulate social relations and which in turn, linked to the development and use of municipal property, local budgets and other local finance in the public interest the municipality [2].

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Economic fundamentals provide the economic independence of local government, serve the needs of the population and create conditions for its life. Strengthening and development of the economic foundations of local government greatly affect the economic situation in Kazakhstan in general. This suggests that public authorities should promote the economic foundations of local self-government.

In accordance with the Constitution of the Republic of Kazakhstan authorities ensure: – Regulation by law, order, transfer the state property in the municipal; – Transfer to local government material necessary for the implementation of specific state powers which may be vested by law with these bodies; – Participation in solving problems through targeted regional programs; – Compensation to local authorities the additional costs arising from the implementation of government decision-making; – Development of state minimum social standards.

Local finance is an economic relationship, through which local governments mobilize, allocate and use in accordance with the functions entrusted to them part of the social product in the form of money. Local finance is an important component of the financial system of the state. They include local budgets, special off-budget funds and finance businesses owned by local governments. Local budgets are the foundation of the budget system, which is not strengthened, it is impossible to radically improve the budgetary elations in accordance with the functions assigned to each level of government. Local budgets as an essential component of the regional finance, money funds are administrative-territorial units, approves the decision of the maslikhat, formed from the income and deficit financing (the use of surplus) budget for the financing of local budget programs in education, health, culture and sports, social welfare, etc. [1]. In this regard, the role of regional finance increases, and the scope of their use expands.

From the local budgets were financed major health facilities, arrangements for internal security, rule of law, protection of the environment. Through local budgets are being implemented part of national programs and activities. The law lays down the principle of clear division of responsibility for the expenditure of budgetary funds between government agencies of national and local levels. In world practice, the income of local budget consists of four main components: taxes, subventions from the republican budget, non-tax revenues and borrowings.

Due to the fact that the growth rate of expenditure of local budgets are sometimes higher than the growth of their income, there is a need for transfers from the republican budget, which reflect the “external” financial cooperation in the region. Intergovernmental transfers (grants) to help solve various economic tasks, the most important of which are: – Implementation of the planned development strategy of the State; – Alignment of the level of socio-economic development of regions, reaching the minimum guaranteed level of living; – To balance revenue and expenditure of local budgets; Compensation for the additional costs of the regional budgets, due to various reasons [3]. At the local government tasked to implement the social programs of the state. Generally funding for services provides by local financial resources. Local Budgets in Kazakhstan took on income and expenditures within 50% of the volume of public funds. Thus, the impact of economic and social changes reflected in the expenditure budget. Budget expenditures – funds allocated from the budget for non-repayable basis within the approved budget.

As already mentioned, depending on the program (state, local) expenditure of funds for their implementation is made from the relevant budget. Expenditures of local budgets are carried out in areas identified by the Budget Code. The budget as the organization of financial relations coexist two trends: 1. The centralization of the system of forms and methods of traffic management of financial resources as a reflection of a more general process of centralization in managing the economy to overcome the crisis and stabilize; 2.

Decentralization of finance with the increased functions of local government and administrative bodies in the formation and use of financial funds. The second trend is justified by the approximate nature of local authorities to local conditions, their greater interest in the socio-economic development of territories. The principle of the administration of financial relationships is the ability to exercise control of finance: the less specific financial terms amenable to formal verification, the more desirable its assignment to a decentralized management, and vice versa, with well-controlled – for centralized management.

Global financial theory and practice specify that the local (local) budgets operate as an independent part of the budget system. Under a separate budget refers to the situation when the body of the regional management based on a fixed income base itself determines the amount of the budget, the specific structure and size of income and expenditure items. His performance is based on the national legislation defining the law in this area of the regional governments.

Extra budgetary funds one of an important link in the financial system of the state. They represent the totality of monetary resources used by the State on a strictly defined goals and having legally prescribed sources of formation. As an economic category extra budgetary funds are relations on the redistribution of national income for the centralization of financial resources allocated to provide financing needs of the target state [3].

The emergence of extra budgetary funds from 1991 was dictated by the needs of socio-economic development: it was necessary to isolate the part of public financial resources on a strictly functional goal relieve the state budget from non-property expenditures with, partly to reduce its deficit. To some extent this is dictated by the need to shift the burden not directly related to the functioning of the state – the cost of capital investment subsidies for enterprises, these goals correspond shaft economic stabilization fund (hereinafter – the Fund for the transformation of the economy).

In other cases it was necessary to identify and distinguish individual social spending and the sources of their compensation from the CE-pour more reliable and effective protection in a fall in their living during the transition to the market. This task were designed to solve the Pension Fund, social insurance, single co-national fund for social support, by public fund of assistance to employment. Some funds are strictly narrowly targeted Appointment – Road Fund, Fund for con-version of military production, innovation funds for various purposes, and others.

The functioning of special extra-budgetary funds parallel to the state budget allows differentiate the financial relationship, orient part of their highly specialized fields, achieve a kind of intensification of the diversity these relations in various areas of financial activity. We classify non-budgetary funds for the following features: – On the basis of trust – on social, economic, scientific, but research, environmental (ecological), migration, promoting the rule of law, cultural and others; – The level of management – on interstate, state local and regional (local).

One should distinguish state extra-budgetary and non-state funds; last very diverse purposefully, although similar to some of the state budget funds, for example, non-store up pension funds, a variety of humanitarian, including international funds. The distinguished as extra budgetary foundations and funds earmarked funding, which until 1996 were inclusive of government budgets: the Foundation of the subsoil and reproduction of mineral raw materials base, Fund for Nature.

Yes, and others considered here funds periodically during the years 1992-1996. Are included in the state budget and were excluded from it. This reflects the process of becoming the financial tracking system, the optimal variant of its structure [2]. Perhaps use of the term “special funds”, which acceptable to all extra budgetary funds and other funds, funds of economic entities (the charter, reserve, depreciation, exchange, repair, stock accumulation, consumption, and others), which emphasizes their designated purpose.

Institutional funds are administered by special apparatus or ministry that promotes flexibility of management line separated as part of financial resources, control over their rational and targeted use. The presence of extra budget funds allows for the rapid control of trust funds, concentrated their control: the global fund management practice independently – without the intervention of representatives government, which allows government agencies fund management quickly address issues targeted funding to react to changing situations.

Through extra budgetary funds are reallocated significant wide volume of financial resources: the extent of re-distribution has reached the beginning of 2005 16% of the domestic product (including the National Fund and institutional development). Finance companies are an integral part of unified system of finance. Collective term – “economic agents” application field in recent years in connection with the engagement of the farm activities are not only legal persons, but also the physical individual private entrepreneurs, development of small business, family business – without a legal entity.

The term “economic entity”, moreover, extends to all legal forms of ownership and activities. Recently, in connection with the resolution of commercial activity virtually to many entities, including those relating to non-productive sphere of state property or shares (subject to certain specified laws, regulations or statutes) are the blurred boundaries of commercial and statutory activities that transforms the actors – in the household, that is focusing its activities not only in a selected, fixed direction but also in the business – aimed at profiting from a related, complementary or incidental activities.

In the present interpretation of the term ‘economy subjectivity’, from the perspective of financial relationships and functioning of the financial system, the term includes partially finance ‘households’ (people) as owners of much of the resources and one of the key factors of production – labor. In summary, economic entities that economic agents and economic units (the system of national accounts governmental institutional units), which may on its own behalf to own assets incur obligations carrying out economic activities and transactions with other units.

However, central to the organizational and economic point of view dealing with system-organized entities – organizations: firms, companies, farmers’ and properties of economic partnerships, associations (unions), national companies, and others rarely used earlier races title ‘plant’, ‘factory’, ‘enterprise’ (Industry) [2]. The availability of business finances as well as in the whole state’s finances is due to the existence of commodity-money relations and the influence of economic laws.

Commodity money relations are predetermined by the social division of labor, various forms of property arrangements. The degree of division of labor between individual producers and service providers determines the presence of independent pre ¬ enterprises of different kinds, their structural units up to the individual jobs. Private producers and service providers produce and share the results of their labor, products, service by sale for cash at prices reflecting the cost of goods. Taken together, these relationships are commodity-money.

Financial businesses include financial companies, firms, associations, corporations, associations, branch closed ministries and other economic bodies, cooperative organizations, institutions engaged in industrial, agricultural, construction, transport, supply, trade (mediation), procurement, exploration, project activities, consumer services, communications, public utilities, the provision of various financial, credit, insurance, academic, educational, building plants, information, marketing and other services in diverse areas of public benefit activities.

The rise in the course of economic reforms division of state-term ownership of the republican and municipal, as a way exists many forms of public enterprises, their associations and co-management bodies on a commercial basis – companies, associations, corporations, consortia, etc. This process promotes the development of commercial calculation, translated regions of self-government and self-financing. Finances of each branch of the national economy have their own appreciable differences arising from the techno-economic characteristics of the industry.

But at the same time, the essence and basic principles of organization of finance businesses of all industries, the same thing about agreed general principles of management and uniform economic laws. All this predetermines the possibility and necessity of them in the original link with finance businesses. Finance businesses have the essence and the outer forms. The understanding the inner is essence of the contents of finance which defines them as a special category of finance.

The multiple relationships in finance businesses to reduce enlarged group; these relations fuss cabins in the process of expanded reproduction between: – Government and business entities in the contribution plan to obtain payments to the state budget, extra budgetary funds, formation exchange funds and resources, in part with funding from the state budget (mainly for state-owned enterprises: – Economic entities and credit system, but loans and interest payments for the provision of long-term and short-term loans; – Economic entities and their parent organizations in the redistribution of ncome, funds for rental payments; – Different business entities enter into a relationship to pay for raw materials, fuel, goods, works and services, including brokerage (with stock exchanges, brokerage houses, etc. , economic agents and insurance agencies by country terms of property, personnel; – Between economic actors in the production and implementation of shares and other securities, the mutual lending and equity participation in joint ventures; – Between owners and employees (employees) – for wages, material incentive, recommendations, the issue of shares and payment of dividends; – Within the businesses in connection with the formation and use of trust funds for farm destination – the charter, consumption, accumulation, backup, monetary, repair, or their possible modifications; – The main activity of economic agents and FDS governmental capital construction in the process of securing financial resources, capital cost, and as payment for work and services performed for its own capital construction. The main features of finance business are not: – The diversity of financial relations, the diversity of their form and purpose; – Required the presence of productive assets (capital), while for non-industrial businesses – non-productive assets (capital) and the appearance in connection with the relations associated with their formation, constant replenishment, the increase and redistribution. Productive assets – is a dynamic element of production, their movement is continuous as production itself, thus there is a constant changing of cost. At any point of the enterprise operating funds may be in-kind and cash.

Thus, finance businesses represented an economic relationships connected with creation, distribution and use of cash income, savings and funds in the production and sale of products, works and services. Classification businesses Many business entities are classified on various grounds and reasons of their separation on a particular type may have a significant influence on the character of organizing finances. The most common sign of distinction is to make companies and organizations to one of the areas of activity or intangible (non-productive). The entities in the material sphere of activity create material products and goods are the basis of life and society. Products and benefits of acting naturally physical terms, in the form of onverted energy of nature, or are being further processes of production, affecting the utilization of established cultural products by consumers (transportation, harvesting, storage etc. ), in which a build-up cost. Part of this product is consumed within the scope of its branches (production of industrial consumption), the other sends final consumption, including those in non-production sphere. The results of the nonproduction sphere take the form of services, the creation of which coincides generally with the process of their consumption, that is, they are not subject to the retention, storage. (In some cases there is a specific accumulation, for example, in education, science – the accumulation of skills, knowledge, management experience, skills).

The above fundamental differences between the two spheres of social production are reflected in the finance organization of these spheres – as in the financing, movement of financial assets in the process of value creation of products or services, and in formation of financial performance – the distribution and use of savings income or profits. For example, in the movement of funds in the material sphere significant place in those associated with the creation of inventory, WIP, finished goods and the passage of some other processes that are not characteristic of working opaque sphere. Inside the material and immaterial spheres distinguished industry by pre spheres (in the SNA – activities), which belongs to ring grassroots economic units is reflected in the organization of finances.

Divide by the industry although it reflects a qualitative homogeneity economical activity, but assumes its great diversity, even within sub-sectors or groups of economic actors. This is due to organizational, technological nature of production. For example, in engineering is significantly affected by product type, which affects the processes of circulation of funds. Character movement and maintenance cycle funds are dependent on organizational but technological type of production: mass, mass (including large-scale, medium, small-scale), individual. On the organization of finance, mainly in the sphere of material of production, affects the duration of the production cycle manufacturing of products, seasonality, climatic factors. The seasonal factors are typical for agricultural, construction industries.

Such factors affect the magnitude of the cost of production, for example, the production of long-cycle or seasonal nature cause significant diversion of funds in progress that the use of credits leads to the payment of large sums of interest, in the construction of seasonality is more expensive works in the winter. The natural and climatic factors lead to increased costs in connection with the payment of regional coefficients of wages, insurance, and other ancillary costs. Ultimately, cost increases affect the financial results: in a competitive market such enterprises will receive less income in sales or to maintain their position in the market must find ways to finance its maximum.

The next major feature of classification is the nature of the financial activities of economic entities commercial and nonprofit. The purpose of business is to receive income. Operate on a commercial basis the vast majority of businesses in material production and a significant proportion of organizations and institutions intangible areas: commercial banks, insurance companies, other financial sector institutions (savings and deposits, investment funds, stock exchanges, various institutions serving the securities market and monetary and credit markets), trade and intermediary businesses, voluntary society governmental fund, trust companies and others [2].

Much of the institutions of the nonproduction sphere remains in the nonprofit sector, public administration, defense, state social insurance and protection, law enforcement, environmental protection, part of health and education, culture and the arts, basic sciences. A non-profit activities directed county not to receive income (profit), and to perform the function and actions necessary for the entire society, including the provision of social protection. Differentiation of commercial and noncommercial activities recognized by law and taken prisoner in the Civil Code of the Republic of Kazakhstan, which is determined by the notion of legal entity.

Legal entity – an organization which has the right of ownership, economic management or operational management of separate property and responsibility of the property for free commitments, may on its own behalf to acquire and exercise property and personal rights and obligations, sue and be sued in court. A legal person must have self balance or an estimate [1]. With respect to this character classification Organization Finance focuses on different principles of activity durations: on commercial considerations or budgetary finance which is unconnected, covering the needs of economic subjects at a certain comrade determined level. If agencies are combining commercial and noncommercial activities, he latter implies the corresponding financial implications: self-organization of such activities, payment of taxes and obligatory payments, the distribution of the revenue or profit. An important feature of the classification of business entities are belonging to a particular form of ownership. According to the legislation in the Republic of Kazakhstan adopted two forms of property: private and public. Private GSS liability acts as a property of citizens and (or) not public legal entities and their associations, as a special kind of private property ownership in favor of public organizations. Public ownership is represented republican and communal property. Within these forms of ownership will establish different economic structures, resulting in a greater number of organizational and legal forms of management: 1.

State-owned enterprises, based on state property, including: – Republican to the national tasks of economic and social development of Kazakhstan; – Enterprises of communal property – for solutions for cottages to meet the social and economic needs of the population of the territory, are in the local jurisdiction [1]. 2. The entities, based on private ownership of legal persons: business partnerships of various types, including joint stock companies, cooperative businesses and organizations. Business entities are based on the property associations. Joint ventures are based on a combination of property founders, including foreign legal entities and citizens. Private business entities based on the property of citizens. Joint ventures are appearing with participation of various above-mentioned forms of ownership.

The legislation of the Republic of Kazakhstan shall be guaranteed equality of all forms of property and equal protection of the rights of subjects within comrade property. One should distinguish legal forms interacting entities, and their sizes. The organizational and legal forms of business entities are determined by the form of ownership – public, private (with varieties). The size of economic entities may be small, medium and large. The legislation is defined pair meters of economic entities in different spheres of activity in order to promote their development as effective structures to promptly resolve production and organizational problem. For example, in Kazakhstan to the subjects of private enterprises include: – Subjects of individual enterprise; – Micro-entities; Small businesses; – Subjects of medium-sized businesses – Subjects of big business. The variety of different classification characteristics of farms is the subjects, the possible combinations complicate the microfinance mechanism of this section of the financial system, require constant improvement, and a clear legislative order of activities, a well functioning management and control of financial processes [5]. Conclusion: as a result of the above can be summarized that local finance is an important component of the financial system of the state. They include local budgets, special off-budget funds and finance businesses owned by local governments.

Local budgets are cash funds of governmental units, approves the decision of the maslikhat, formed from the income and deficit financing (the use of surplus) budget for the financing of local budget programs in education, health, culture and sports, social welfare, etc . e. Extra-budgetary funds are a set of monetary resources owls used by the State on a strictly defined goals and having legally prescribed sources of formation. Finance businesses represented economic relationships connected with creation, distribution and use of cash income, savings and assets in the production and sale of products, works and services. 1. 2 Summary of Municipal Finance Municipal Finance – a set of economic relations that arise in real money turnover on the formation, distribution and use of centralized funds of financial resources. The material basis of finance is cash flow.

The real cash flow – it is an economic process which causes the movement of value and is accompanied by a stream of cash payments and settlements. The objects of the real cash flow are the financial resources that are the sources of funding for expanded reproduction. Municipal Finance express the economic relations associated with providing centralized sources of financing municipal sectors of the economy, the most significant development programs, manufacturing and public sector organizations and institutions of the public sector, etc. Their operation is aimed at achieving the common goals of welfare economics. Municipal Finance functions within the financial system of the state and is its focal point (Fig. 1). Fig. Composition of state and municipal finances State and Municipal Finances Budgetary system The system of State and Municipal loans The system of non-budgetary funds Finance as an economic category depends on the change in the relationship between the links of the financial system. This applies primarily to the relationship between finance and macro-level micro-finance. Finance macro-level, and above all state and municipal budgets are based on the financial capacity of enterprises. Finance contribute to the overall objectives of economic development, and therefore require their optimal organization. The way the organization sets a certainty of Finance.

Distribution and use of financial resources in the state are carried out within the framework of integrated management of financial flows. An important methodological factor is the determination of the principles of organization and functioning of state and municipal finances, allowing identify the direction of impact of finance on the development of state and municipal sectors, to develop criteria for their operation. Municipal finances are based on information flow. Government decisions are based on the totality of information. Analysis of incoming information is important as a decision point, and in the process of monitoring its implementation.

The information contained in the operational and statistical reports, contracts and agreements, settlement documents, etc. State and municipal finances are a clear target orientation. They affect certain socio-political interests of certain segments of society. However, in all its aspects, they focused on the decision of state and municipal tasks. Municipal, representative and executive bodies in order to fulfill their functions vested certain property and financial-budgetary powers. Practice has shown that resource provision of these rights are municipal finances, which include local budgets (in the Republic of Kazakhstan – the budgets of regions, districts, towns, rural settlements) and finance business entities that are used to satisfy the territorial needs.

Municipal Finance offer finance a wide range of activities related to socio-cultural and communicative and public services. Thus, municipal finance – a system of economic relations, through which are distributed and redistributed the national income, fund of funds used for economic and social development of municipalities. A municipal finance government is actively pursuing social policy. By giving local authorities the budget, provides funding for education, health, municipal services to the public, construction and maintenance. Receipts in local budgets of the Republic of Kazakhstan include the following types:  – Revenues of local budgets; Received official transfers from higher budgets, legal and natural persons, foreign States;  – Repayments of previously issued from the local budgets credits. In turn, revenues consist of: – Income taxes, fees and other obligatory payments; – Non-tax revenues; – Income from capital transactions. Assigned to local budgets, taxes, fees and compulsory fees included:  – Corporate income tax collected in the administrative-territorial unit in the amount of 50%;  – Excise duty on spirit-based drinks, gambling at 50%; – Individual income tax; – Social security tax; – Property tax; – Land tax; – Tax on vehicles; – Share of the Republic of Kazakhstan on production sharing contracts concluded in part, transferred to the local budgets;  – Taxes, fees, fees (except registration fee issue securities).

Non-tax revenue in local budgets is include: – Dividends on shares of companies that are public property;  – Income from lotteries conducted by local authorities; – Remuneration (interest) for loans from local budgets; – Receipts from sale of property belonging to local authorities;  – Receipts from sales of services by government agencies, subordinate to local authorities;  – Income from rental property communal property; – Income from government procurement, organized by government agencies, subordinate to local authorities;  – Income from land rent; – Payments for environmental pollution in local government environmental funds in the amount of 50%;  – Other administrative fees; Administrative fines and penalties levied by government agencies, subordinate to local executive bodies;  – Other receipts under the laws of the Republic of Kazakhstan. Regional representative bodies approved by stable norms of income distribution between the regional budget and the budgets of districts, cities, as well as long-term size of subsidies, transfers from regional budgets to the budgets of districts and cities and budgetary exceptions, transferred from the budgets of districts and cities in regional budgets. Budgeting is based on local budget programs, which are developed by local authorities. Financial support and implement the local budget programs assigned to local administrators of budgetary programs – local executive bodies and their affiliated government agencies.

Local executive bodies have the power to borrow funds from businesses and individuals, as well as from the Government of the Republic of Kazakhstan (by credit from the national budget) to fund regional investment programs agreed with the Government of Kazakhstan. Borrowing is in the form of a loan or issue of securities of local executive bodies, their order determined by the Government. Included in the budget estimates for programs of government agencies executed the leaders of these institutions in accordance with the financial settlement of local executive bodies. In the fiscal systems of many countries accepted the division of revenue budgets of different levels on the fixed and regulators. Retired or own revenues, funds, permanently or for a long time (several years) received in the budget of a territorial unit on a statutory basis in whole or in a fixed proportion.

Regulators are the funds transferred from the higher budget as a percentage of their income, a subordinate budget to balance income and expenditure lower budget. The list of regulatory revenues may change with the development of the higher budget for the new fiscal year or on the basis of decisions, orders authorized for such actions of the body. By the fixed incomes of local budgets are so-called “local taxes”, the central budget – “the taxes”. “Fiscal adjustment” is done by transferring part of the proceeds of national taxes and revenues to the sub-national level, with a lack of own revenue sources for the full implementation of the territorial bodies of their functions.

In Kazakhstan, with the abolition of the division of taxes on national and local, do not use the terms “fixed” and “regulate” or income taxes, although the actual consolidation of income saved, and the process of fiscal adjustment in the form of subsidies, fiscal exemptions, funds transferred by netting and other transfers. Streamlining budget decisions possible method of budgeting from scratch (rather than by adjusting last year’s data) and the use of planning, programming budgeting (PPB). The method of budgeting Zero-base lies in the fact that every year is a new cost estimate and budget authority is obliged to fully justify their program expenditures and set priorities. This does not preclude funding of ongoing programs, but as part of a given budget year, fiscal policy, determined by the Ministry of Finance in budget circulars used by the public institutions in the preparation of estimates.

The method of DSS used to finance the measurable results of budget programs in order to determine what combination of institutional arrangements and resource allocation among the various agencies could most contribute to achieving the best indicators of performance. This method can be used norm costs. Thus, the budget process in the local link can be based on performance criteria. Summary conclusion: as a result of reading the above, we learned that the municipal finance – a set of economic relations that arise in real money turnover on the formation, distribution and use of centralized funds of financial resources. Municipal finances are based on information flow. Therefore, government decisions are based on the totality of information. Analysis of incoming information is important as a decision point, and in the process of monitoring its implementation.

This information is contained in the operational and statistical reports, contracts and agreements, settlement documents, etc. State and municipal finances are a clear target orientation. They affect certain socio-political interests of certain segments of society. However, in all its aspects, they focused on the decision of state and municipal problems [2]. The main problems of economic development of Kazakhstan’s regions Despite the economic growth in the whole country, there is a problem significant differences in the level of socio-economic development regions. Especially strong socio-economic problems are manifested in rural areas and small towns. Despite the government measures, the most acute problems in regional development of the country remain unresolved.

Challenges in regional development of the country:  1. Uneven distribution of income among regions. There are significant differences in the amount of per capita income between regions and within regions, in particular, between the regional center and areas that creates the ground for social unrest. Thus, the difference between income and Atyrau, Zhambyl oblasts of 3 times, there are large differences in income between Atyrau and areas of Atyrau region. 2. The presence of serious socio-economic problems at the local level: low incomes and high unemployment, high levels morbidity and mortality rates, high crime, the problem access to quality education and health services in rural areas. 3.

The presence of depressed rural areas, communities of concern points: the presence of human settlements, abandoned people, sat in an environmentally disadvantaged areas, small towns, survivors of a large outflow population and still are in crisis. 4. Undeveloped and the poor state of infrastructure: problems with drinking water, lack of paved roads in rural areas, poor state of the warm water in urban, poor communications in rural areas, poor state of health and education in rural areas, absence or poor state of social and cultural facilities  sphere. 5. The bad ecological situation in most regions of the country. High level of pollution of water, soil, air, the presence of zones of ecological disasters, the increased incidence of diseases associated with poor  environmental situation. 6. Poor investment and business climate in the field.

Administrative barriers to business and investment activity by the local authorities, the complexity of registration procedures, certification and licensing, a large number of regulatory reviews bodies, weak financial institutions and structures to support business on the ground. 7. Weak use of economic potential of regions occurs on raw orientation of regional economy and a weak development of manufacturing industries. The low proportion of small and medium-sized businesses involved in productive activities. 8. Inefficiency of local authorities and people’s distrust of him. 9. High level of corruption in local government, incompetence local officials, lack of local budget and authority to problems, weak involvement of citizens in solving problems on  field. In Kazakhstan, 7 medium and 58 small towns, where about 23% of the urban population of the republic. [The concept of regional policy 2002-2006.   In small towns with predominantly extractive industry profile live 7,5% of the urban population of the republic, in cities with enterprises of the agricultural areas – 6,1, in cities with processing industry – 5,6, in cities with recreational value – 1 in the centers of the military – Industrial Complex – 0. 8, at transportation hubs – 1,9% of urban population. The main problems of almost all small towns of the Republic are: a long recession and, as consequently, high unemployment, a significant reduction living standards; exodus from these cities, lack of budgetary funds and investments; problem of content objects social workers; weak transport links, low supply of electricity and heat from the low solvency of the consumers.

Complex economic and social situation in “Coal” cities – Abay, Saran, Shakhtinsk, where most mines already worked out in the cities, by core facilities which serve works for the extraction of phosphate fertilizers – Tau and Zhanatas; Lead – zinc ore – Tekeli. As a result of reducing or termination of mining of mineral – raw materials in these cities a significant reduction in the number of jobs, exacerbated complex problems related to the critical state of social and production infrastructure. Total for small and medium-sized cities is idle for a variety of causes about 40% of registered businesses. In the cities – centers of the military – industrial complex – consequence of the economic crisis that has engulfed the city main company, became departure of qualified personnel.

Also unfortunate situation has developed in cities such as Alga, Temir, Shalkar, Aral, Kazalinsk, Ayagoz, Ball in the zone of ecological disasters. The economy which are processing plant of agricultural products are in difficult situation. They have well-developed infrastructure, building facilities, skilled personnel. Of the 159 rural districts of the country 27 districts with a population of 1,024. 5 thousand people (15,6% of rural population), Government Decree Republic of Kazakhstan dated 11 May 1999 N 561 were assigned to areas with depressed economies with the adoption of measures to help them State aid. These areas are located in all areas republic, including in the Northern Region – 9, in the West – 5, in the East Kazakhstan- 3, Karaganda region – 2, Southern Region – 8.

Depressed rural areas are far from markets goods, have a weak social and productive infrastructure, unfavorable natural, climatic and environmental conditions. Issues of further development of the economy, ensuring employment and improve living standards typical for border areas resulting in a significant outflow population of them, weakening the economic potential and milestones country. One of the most acute problems of regional policy was the problem of regional imbalances in the monetary and financial credit sector. In order to identify real opportunities for regional self requires constant monitoring of the financial situation regions on a wide range of indicators.

Regional policy should to have a mechanism for fiscal and tax software, aimed at creating favorable conditions for development of all regions, using local sources of investment. Allocation of State budget should take into account the participation of regions in its formation, a combination of sectoral and regional approaches to features of regional development, and the functions of the Centre should be focused on supporting priority programs that integrate the interests of regions. It should be ensured comprehensive evaluation of the proposed solutions for the state as a whole and its individual regions. Allocation of funds to ensure regional programs should be based on finding the best option, but not on the basis of subjective views of the central government, as is done now.

One of the most important problems in the implementation of regional policy is lack of a coherent system of governance in the region. Lack of effective management system at the regional level constrains and negates all efforts to implement regional policies. The proposed new laws system of local governance itself is complex to be effective. In addition, it does not provide unity management of all socio-economic processes in the region. First of all, you need to solve the problem of distinguishing public administration and local self-government in accordance with the tasks assigned to them basic functions. The resolution of many regional problems by intensive is involving both domestic and foreign capital.

Regional associations of economic interaction could, in one hand, to integrate the efforts of the regions, various state and business structures for the protection and legal restrictions on outside, including foreign intervention in the socio- economic development, and on the other – together and organized advantage of international cooperation with various regions and firms in the world. Evaluation of the competitiveness of Kazakhstan’s regions Competition is crucial to the functioning of a market economy. Adam Smith, expounding his famous principle of “invisible hand”, he emphasized that the specific mechanism, pushing employers to follow the instructions of the “invisible hand”, is competition.

Competition – it is a struggle, a competition between producers for the most profitable spheres of investment, markets, sources of raw materials. Competition directs the activities of economic entities in a favorable direction for the entire society. In the competition wins the one who fully satisfy the interests of consumers. The ability of an object to withstand competition in this market is competitive. Competitiveness can be viewed at different levels: country, region, industry, company and product. The aim of our study is to study the competitiveness of the region. In the paradigm of competitiveness proposed distinction between general, economic and strategic competitiveness of the region.

The overall competitiveness of the region characterized by the presence of resource potential, as well as collection of the most diverse conditions of territorial development, implementation of which provides leadership in the region in the world’s exchanges, and create conditions for achieving a high quality of human life on this territory, the economic competitiveness of the region – its capacity to produce goods (services) that meet the highest requirements of the demand of national and international markets and create conditions for sustainable growth potential of the competitiveness of business entities, the strategic competitiveness of the region – the purpose of achieving the overall competitiveness of the region from a strategic perspective by taking all the available factors of regional development []. Economic competitiveness of the region – is a leading, but not the only factor in its overall competitiveness. It is multivariate so competitive, the region should have a diversified economy with innovation predominant post-industrial sector, a unique single-sector production with a considerable export and real participation of people in the region in the distribution of income. Competitiveness of the Republic of Kazakhstan depends on the competitiveness of each region. Each region contributes to the competitiveness at the national level.

The development of the regions of Kazakhstan today is a top priority as dynamic and competitive regions are a source of growth throughout the country, support for national policies to reduce regional disparities and promote more balanced development. JSC Center for Marketing and Analytical Research “was conducted analysis of the competitiveness of regions in order to identify the strengths and weaknesses in developing regions of the country. The most important when assessing the competitiveness of the region is to determine the competitive advantage of the region – a certain value, unique to this region, which distinguishes it from other regions and allows successful complete. The competitiveness of a region’s ability to identify, create and use a competitive advantage to retain or improve its position among other regions.

In general, the assessment of competitiveness depends on whom and with what purpose this assessment holds. Potential investors will primarily interest the region’s competitiveness on the factors of production, investment and business climate, environmental indicators, etc. For the regional bodies of executive power to assess may be to define the contribution of each region to increase the competitiveness of the country, defining the place and role of the region. Regional authorities are interested in comprehensive assessment of the capacity of the region, identifying its competitive advantages and constraints to development, to develop a strategy for the region.

Other objectives might include: positioning the specific region in a number of other terms of the influence of the region’s competitiveness on the country’s competitiveness, the neighboring regions, improving the image of the region, etc. In order to identify potential regions of Kazakhstan, as well as to further define the measures for the sustainable development of the country and entering it into the top 50 competitive countries in the world, greater emphasis is placed on analysis to identify the availability of infrastructure, investment, innovation and other advantages of the region. Drawing ranking regions of Kazakhstan was carried out using the index method by analogy with the method used in determining the competitiveness of countries in the World Competitiveness Report, published by the World Economic Forum.

In that report, the country’s competitiveness is measured by two indices: Global Competitiveness Index (GCI) and the business competitiveness index (BCI), these indices are calculated as a weighted average of other indicators. For example, the Global Competitiveness Index includes the following settings: institutions, performance infrastructure, macroeconomics, the level of basic, vocational education, higher education and health, technological readiness, complexity of business innovation, as well as indicators of market efficiency. In order to determine the components of the indices reflecting the level of development of the region should, first of all, define a set of indicators that will be considered when determining the competitiveness of the region.

An important condition for building the index, which would more fully reflect how competitive is a given region, is the choice of appropriate indicators that should have been enough to fully reflect the criteria of competitiveness and the main competitive advantages, to reflect the progressive nature of industries, as well as be accessible and contain a statistically minimum of subjective interpretation. As the need for a high standard of living in the region is one of the priorities in the index, which determines the standard of living of the population were included: – The gross regional product per capita; – The index of purchasing power; – Rate of unemployment; – The index of poverty; – Indicator housing supply; The index of medical security. Summary of the matrix regions of Kazakhstan competitiveness indicators Indices | Low level| Average level| High level| Index of quality of life | Almaty Atyrau Zhambyl West KazakhstanQyzylorda Mangistau| Akmola Aqtobe East Kazakhstan Karaganda| Astana cityAlmaty city| Productivity index| Akmola Almaty East KazakhstanZhambyl Karaganda Kostanay Qyzylorda Mangistau Pavlodar| Almaty West KazakhstanAtyrau Aqtobe| | Index of Innovation Development | Aqmola Aktobe Almaty Zhambyl West KazakhstanKaraganda Pavlodar Kostanay Kyzylorda North KazakhstanSouth Kazakhstan| Atyrau East KazakhstanMangistau| Almaty city| Index of infrastructural development Almaty Aqtobe East KazakhstanZhambyl Karaganda Kostanay Qyzylorda Mangistau| Akmola Atyrau West KazakhstanNorth-KazakhstanAlmaty| Astana city| The composite index of competitiveness| Aktobe Almaty Aqmola Zhambyl West KazakhstanKostanay Qyzylorda Mangistau Pavlodar North KazakhstanSouth Kazakhstan| Almaty Astana Karaganda East KazakhstanAtyrau| | Source: Evaluation of competitive areas of the Republic of Kazakhstan. Rating regions. Report research results. Center for Marketing and Analytical Research. Almaty, 2006. Principles and objectives of the regional policy Regional Economy in the modern sense emerged in the Western scientific thought.

In the period of the economy as a science researchers’ attention was drawn to certain differences in the geographical, territorial, natural characteristics of areas that influence the development of business processes. In the mercantilist economic views are found representations of the use of “specific” means, namely the location of the state and its regions in relation to other states for trade development. In particular, in the treatises A. Serra, there are four groups of funds: the number of crafts, nature of the population, trade and government policy. [Antonio Serra. A brief treatise on the means to provide gold and silver the kingdom, deprived of the mines of precious metals. Regional aspects are present in economic studies of the classical school.

Specifically, Adam Smith, wrote that the first successes of crafts and industry are taking place where convenience message opens the world for sales of all types of labor, and they are always late to begin to develop in the inner regions of the country [Adam Smith. Study on the Nature and Causes of the Wealth of Nations. Moscow, 1935, pp. 22-23]. Later regional studies have become clearer. However, the regional economy is often seen as part of a broader regional science. Thus, one of the founders of Regional Studies W. Izard spoke primarily of regional science as a kind of science, part of which is the regional economy [Izard W. Methods of regional analysis: an introduction to the science of the regions. – Moscow: Progress, 1986, p. 323].

The concept of a regional meta, part of which is the regional economy, went into science as a regionalism. “Regionalism – an interrelated system of science, reflecting the impact of regionalization on all aspects of social life – economy, culture, politics … It integrates the study of regional problems requiring an interdisciplinary approach. … The Regional Studies Included in a regional economy based on regional theory, economic analysis, placing” [Federalism : Encyclopedic Dictionary, Moscow: Infra-M, 1997, p. 200]. This interpretation of the regional economy seems debatable. It should be recalled that for a long time in the Soviet science regional economic problems have been studied in the framework of economic geography.

Until now, there is a perception that draw a clear line between economic geography and regional economies is almost impossible [Kuznetsova O. Theoretical foundation of state regulation of economic development regions. / / Economic Issues, ? 4, 2002, p. 46-66, pp. 48]. In the 60-70-s of the twentieth century has accelerated economic regional studies. The concept of “regional economy” has been widely introduced into scientific circulation I. Nekrasov, who objects to her study attributed the allocation of productive forces, the territorial organization of the economy and cantonments industry, agriculture, transport [Nekrasov, N. Regional Economy. – Moscow: Economics, 1975, pp. 22-23]. Close to this understanding of the science has V. F. Pavlenko, calling it the territorial economy.

He noted that the territorial economy is closely linked to those parts of economic science that deal with common problems and specific issues of placement in the general population and may be called the economy the productive forces [V. F. Pavlenko Planning for Regional Development. – Moscow: Economics, 1984, pp. 238-285]. Later, this approach was even more specific, as a result of the regional economy has been regarded as equipollent with industry economics, but not engaged in a particular industry and region. With the development of market relations new aspects of regional development has become the subject of study of the regional economy. The “razmeschenchesky” aspect has to take second place.

Thus, in one of the textbooks on economic theory in determining the object and purposes of the regional economy highlighted the following features: – In production: production of goods and services for regional programs for internal and external markets, the production of public goods (airlines, railways, roads, sewage treatment plants), the provision of public services (tourism, education, medicine and other cultural events); – In pricing: the regulation of prices and tariffs, developing all kinds of incentives and penalties, the definition of tax policy; – Distributional: the formation of regional distribution channels, products and services; – In the exchange: to promote the sale of goods and services, after-sales service, organization of advertising, the formation of regional telecommunications systems, etc. ; – In the field of consumption: To ensure a prudent level of consumption [General economic theory (political economy). Moscow, 1995, p. 335]. Similar approaches are planned in other studies.

Example, a textbook on the course of the regional economy there are three sections: the territorial organization of the productive forces (location, clusters, free economic zones), economics areas (areas of economic structure, methods of analysis), financial resources and territorial administration (budget territory management techniques) [Zavala V. Regional Economy. – Vladivostok, 1994, p. 475]. Thus, currently there are at least two approaches to the subject of the regional economy. In the first case focuses on the Exploration of the productive forces and the specific issues of regional development, in the second – the emphasis is on studies of regional economic mechanism. The second approach is recognized by many scientists more justified, because that is where the regional economy gets its own research direction does not intersect with other disciplines.

However, in my view, this approach leaves out the regional economy such an important issue, as the regional economic growth. Economic mechanism – not an end in itself, it is intended to ensure economic growth in regions which opportunities are largely determined by the achieved level and structure of the productive forces. Therefore this division of the subject of the regional economy appears to be quite legitimate. In my opinion, more fruitful is not opposed to the two approaches and their integration. This opens the possibility, if the subject of regional economy considered a regional economic system. Category “Regional economic system” was used recently.

It applies, for example, studies by scientists at the Institute of Economics of MES RK, Karaganda Institute of market relations, IEIE SB RAS and has not been yet settled definition [Zhaleleva R. Z. Consumer markets of Kazakhstan and ensuring their balance. – Almaty, 2002, p. 128, Larina N. I. Paradigm Shift in regional politics. / / Region: Economics and Sociology, ? 2, 2000, pp. 3-22, Maslov V. V. The model of quasi-region. / / Region: Economics and Sociology, ? 2, 2000, pp. 17-36. ]. In our view, the regional economic system includes regional resources (natural, capital, financial, labor, intellectual), regional economic arrangements, regional institutions. Use of this category allows you to combine the territorial nature of the region with its functional and economic.

The state development strategy identifies regional policies to manage the economic, social and political life of the region, coordinate the relationship centers and regions promote the effective development of regional relations. Socio-economic factors include industrial relations area. The central point here is the qualitative aspects of regional industrial structure and its impact on the social fabric of the region. It is known that the level of socio-economic development of Kazakhstan’s regions varied considerably. The regional programs leading countries to the fore the problem of maintenance, preservation and expansion of what the region already possesses.

For Kazakhstan, this means that the creation of new regional economic system should not be at the expense of negation and destruction of socio-economic potential and by creating new elements, capable of adapting to the existing environment. Regional policy should be an integral part of state policy aimed at organizing the country’s territory in accordance with the state development strategy. Objective prerequisites for regional policy are the structural heterogeneity of the country in the space of natural-geographic, resource, economic, social, ethnical and political aspects. Such heterogeneity pull out confirms any action taken with regard to the interests and peculiarities of regions.

Important general economic conditions are the techno-economic factors, covering relationships within the economy, industrial structure, level of technology used and technology, real and potential technological and innovative capabilities of the country. In this connection it should be noted that international experience shows different forms of regional policy are used for different purposes and in different conditions of development of the state. Experts in the field of regional policy and the OECD (Organization for Economic Cooperation and Development) are two types of regional development [N. I. Larina Regional Policy: International Experience and Problems in Russia. / Region: Economics and Sociology, ? 3, 1988, s. 132-147, s. 140].

The first type is the exogenous development with a strong external interference by public authorities. The second type is the endogenous development in which the pulses are given by internal factors of development. The characteristic feature of locally oriented economy is emphasis on policy of endogenous development, i. e. development, using local capacity, natural resources, which ultimately should lead to boosting the economy in the regions and the role of small businesses with this development. They base their activities on the basis primarily of the peculiarities of local market conditions, volume and structure of local demand, faster and more flexible to adapt to it.

An effective regional policy is implemented on the basis of the following principles: – Consistent implementation by all the authorities of the state regional policy; – The account in the decisions of central government interests ¬ owls and features of the regions where these decisions relate to; – Increasing the independence of regions in solving governmental own problems, i. e. formation of an effective government. “The regional policy is a special kind of state economic policies for government regulation of territorial development” [Assekritov S. Shirobokova B. Intergovernmental relations: issues and approaches to their solution. The Economist, 2001, ? 1, pp. 7-66] There are different views on the problem and the essence of regional policy, theory and practical ways to implement it, which is caused by uneven understanding of the object of regional policy, objectives and means to carry it out. The main areas of regional policy are: – Coordinating the interaction between levels of economic management at the regional level and at state; – Determination of effective city region’s specialization in a regional perspective; – Economic growth depressed areas; – Development of new areas, taking into account their resource potential; – Implementation of a unified social policy. The regional policy aims to smooth out the various disproportions and crises in the aspect of social and economic development of regions.

Regional politics has now officially important, as it develops now in relatively new areas, which in Soviet times was the regulatory center. Regional policy consists of several components, which are intended to cover all areas of activity of each region separately. It should be mentioned the very purpose of regional policy, which aims to develop mar ¬ relationship status at all interested regions, creating the necessary conditions for the development of promising production and entrepreneurial skills of citizens. Among the components of regional policy are the following: 1) Social – directed to social protection and facilitating population, development and maintenance of the appropriate state of social infrastructure. ) Economic – increased efficiency of production in the region, taking into account natural resources, financial and material resources, development and support and medium-sized businesses, export, promote investment activity, etc. The need for competent regional policy finds its clearest expression in a particular period of crisis situations. Regional emergency situation occurs when deteriorating economic conditions of regions. In order to prevent the crisis required additional intervention legislative and executive authorities, the introduction of emerging GOVERNMENTAL methods of economic regulation. It should highlight the most common causes of crisis situations at the regional level: • A significant decline in production; worsening demographic situation, the negative natural increase, leading to depopulation and deterioration gene pool; • increasing in unemployment over 15% of the economically active population; • the destruction of socio-economic infrastructure; • An uncontrolled influx of refugees and foreign work ¬ sneeze, which create an atmosphere of social tension. There are various methods of regional policy. In general terms, they can be divided into direct and indirect. The direct method requires the active intervention of the state through targeted funding territorial to be structured (creation of growth centers). The indirect method is aimed at creating a favorable atmosphere in the economy through financial systems.

Among the direct methods of regional policy is the development of various regional programs, including a set of targeted programs, each of which has its direction. These programs are governing economic, social, scientific and technological development through the formulation of specific strategies to address priority issues. Each regional program includes several classification features, which characterize the content of prob


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