Young Talent Is Key Asset

Kazakhstan has great assets that can be deployed to accelerate country development. And among these assets oil is not the most important one. As Professor Krzysztof Rybinski, Rector of New Economic University, believes, the country key asset is its young, talented generation, which has an incredible potential. We present for our readers the article of Mr. Rybinski.

When end of the semester approaches parents often ask their children about the final grades they will have. Often a student has some good grades and some not-so-good ones. There are two possible reactions of parents. They either focus on bad grades, investigate what happened and make their son or daughter improve them. This reaction is the most common. But some parents have different attitude, they focus on good grades and motivate their child to develop further in the direction that was revealed as his or her strength.

This article is written by a university rector. However, it will not be about education but about investment attractiveness of Kazakhstan as seen by an economics professor, who has spent in Kazakhstan just four months. In this article, first, we will take the approach of a parent concerned with not-so-good grades, and, then, we will show what Kazakhstan can achieve if it builds on its already revealed strengths. In what follows, we will analyze the last 10 years of selected data that are important for assessing the investment attractiveness of Kazakhstan.

Let’s begin with not-so-good grades. Two major measures showed in figure 1 reveal Kazakhstan’s international investment competitiveness: exports and foreign direct investments (FDI) in relation to GDP. Over the last 10 years both measures exhibit a downward trend. FDI dropped from 10–13% level to 3–7% of GDP while export fell from 45–55% to under 40% of GDP. While some of the FDI decline can be attributed to the world financial crisis, at the same time other emerging economies saw growing volumes of FDI. Exports explain the international competitiveness of the Kazakh economy. While recession in Russia and devaluation ofrubble account for large part of this downward trend it also shows much deeper structural challenges. Economists are not surprised to see such a trend, many countries that are resource-rich find it difficult to build strong export base outside the oil or gas sector. When oil sector puts an upward pressure on wages across the country and attracts the best talent, other sectors find it difficult to develop. It is called a “Dutch disease” by economists.

Now we can turn to measures of structural competitiveness. World Bank publishes Doing Business index that measures friendliness of country regulations for doing business in a country. A decade ago Kazakhstan was ranked in the 60–80 range, then, there was a continued improvement until the last year, when Kazakhstan dropped from 50^th place to 77^th. Interestingly, when one looks at the components of the index there was no deterioration, on the contrary, some indicators improved. So how does it come that the Kazakhstan’s rank has deteriorated so much? Well, other countries improved their regulatory environment faster that Kazakhstan did. When everybody runs and you walk, they get ahead of you.

World Economic Forum produces annually a measure of country competitiveness basing on opinion of more than 14,000 C-level executives globally. In this ranking, Kazakhstan has improved its standing from 56^th position a decade ago to 50^th recently. Indeed, Kazakhstan made an enormous progress in the last 20 years, from a poor country to a middle income level country. The next challenge is to become a rich country. But it requires that other growth pillars are successfully built, and innovativeness becomes the most important pillar. Unfortunately, in this area news is not so good. In Global Innovation Ranking Kazakhstan slipped from 61^st position decade ago to 72^nd. It suggests that policies promoting higher innovation should be strengthened and international best practices in promoting innovation should be adopted.

Building efficient innovation ecosystems is a difficult and complex task. But the key component of innovation ecosystem is human capital, especially the young generation human capital. Every three years, OECD conducts complex exams among 15 years old high school students to verify their competences. While Kazakhstan scores below OECD average, there are notable improvements: math and science performance improved markedly between 2009 and 2012 while Kazakh youth continue to struggle with skills related to understanding or the written text (79% of OECD average).

So far this article resembled the behavior of a parent concerned with not-so-good grades of his child. But smart parents focus on their child strengths, not weaknesses. And here we have great news. I have worked in many countries in my life, my home country Poland, United States, United Kingdom, many other European Countries, Japan. I spent a lot of time with our university students in the last four months and I can tell that Kazakh young people are among the most talented I have ever seen. This is the biggest asset that Kazakhstan has. The goal of the government, universities, high schools should be to design the system that will allow this young talent to be developed into successful business projects so that country continues to grow fast, irrespectively of the oil price. You can see a confirmation of my statement in the ranking of global talent competiveness index, where Kazakhstan ranks on 40^th place and advanced 6 places in the past year.

Universities should play a major role in creating the system that will allow the great potential of the young generation of Kazakhstan to be released. In the 20^th century, universities focused on giving knowledge to students. Now many universities understand that it is not enough, and they focus on forming proper competences (knowledge, skills, attitudes) that will allow university graduates to find good jobs. This is not good enough for Kazakhstan. The mission of universities should be to create such an ecosystem that will allow students to find their talents, develop them and use them either to transform existing companies or create new ones, which will become successful on the global landscape.

I have recently made many top Kazakh executives, many of them are our graduates, and all of them are willing to contribute to the process of creation of such an innovation ecosystem. Students should no longer write their diploma thesis as long papers that nobody reads. They should form teams and work on real problems sourced by universities from their business partners. Students should no longer be treated as a source of cheap labor, their brains and minds can and should be used to modify existing business models and create new ones. And, believe me, Kazakh young generation has an incredible potential to play this role in the development of the Kazakh economy in 21^st century. Just let them try.

Let me return one more time to the story about the concerned parent. Way too often in the television, newspapers, magazines we focus on the problems that our country faces. In the same manner, when a concerned parent learns that his child has some good grades and some bad grades, he or she asks about the bad grades and pushes his son or daughter to improve them. As a result, children spend more time learning topics which are not of his or her natural interest, and instead of developing their strengths and talents they waste their time fighting with their weaknesses. There are numerous books in positive psychology that explain why it is a bad strategy. A much better one is to focus on child’s strengths. When son or daughter shows his or her excellence in some topic, he or she should spend much more time developing these skills in areas when he or she has good grades. The same applies to the whole country. We want Kazakhstan to become much more attractive for foreign investments so we should spend much more time on developing the country natural strengths. Consequently government should spend much more time debating how to support the young generation than discussing how to change areas where country scores poorly in international rankings. The good news is that building on natural strengths of Kazakhstan is easier, costs less money and takes less time than fighting country weaknesses. For example, young generation of Kazakhstan would benefit from regulations that give more autonomy to good universities. National higher education quality systems could be reformed to focus less on compliance and more on learning outcomes. These are the objectives of the Bologna system, which Kazakhstan is a part of. National knowledge verification systems, such as WOLD examination, could be reformed, and instead of multiple choice testing we could verify student competences by compulsory participation in projects that focus in real business needs.

Kazakhstan has great assets that can be deployed to accelerate country development. And among these assets oil is not the most important one. The country key asset is its young, talented generation. Let them thrive, help develop their talent, let them launch new businesses based on their natural strengths. The future of Kazakhstan does not depend on the price of oil, or economic prosperity of its key trade partners. It is in the hands of the young Kazakh generation. And believe me, this generation has an incredible potential.

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