Mod­ern­iza­tion: Pri­or­i­ties and Essence

A coun­try’s pros­per­ity hinges on the pace of its eco­nomic mod­ern­iza­tion

Economy of Belarus - - CONTENTS - Alexei DAINEKO

A coun­try’s pros­per­ity hinges on the pace

of its eco­nomic mod­ern­iza­tion

Eco­nomic mod­ern­iza­tion has been sug­gested by the Be­laru­sian Pres­i­dent as a ma­jor in­stru­ment to en­hance com­pet­i­tive­ness and main­tain na­tional se­cu­rity. It is viewed as a timely and most ad­e­quate re­sponse to chal­lenges and threats posed by down­turns of the global econ­omy. Glob­al­iza­tion, ac­cel­er­a­tion of sci-tech progress, and growth of transna­tional cor­po­ra­tions toughen up com­pe­ti­tion on the in­ter­na­tional mar­ket in terms of speed and qual­ity of in­no­va­tions. Ear­lier, com­pe­ti­tion mostly re­volved around tra­di­tional prod­ucts with com­peti­tors fo­cus­ing on the qual­ity and eco­nomic pa­ram­e­ters of prod­ucts, while in the past 20 years the ma­jor driv­ing force be­hind com­pe­ti­tion has been the cre­ation of fun­da­men­tally new prod­ucts and ser­vices with a con­sid­er­able share of added value. Against the back­drop of the global re­ces­sion, the growth ca­pac­i­ties of tra­di­tional ex­port com­modi­ties are more than lim­ited. The one who cre­ates a new com­mod­ity and, con­se­quently, a new sales mar­ket gets su­per prof­its un­til com­peti­tors turn out a sim­i­lar prod­uct. You need not look hard to find ex­am­ples. We have wit­nessed mo­bile phones, lap­top com­put­ers and In­ter­net ser­vices trans­form­ing from nov­el­ties to mass-mar­ket prod­ucts.

Fun­da­men­tal Ob­jec­tives

The first decade of the 21st cen­tury was marked by an in­creas­ingly fast com­mer­cial­iza­tion of sci­en­tific dis­cov­er­ies (from 40 years in late 19th cen­tury – early 20th cen­tury to 3-4 years now). Sci­ence has turned into a lead­ing eco­nomic power. Re­search and devel­op­ment projects and in­tel­lec­tual prop­erty ac­count for an in­creas­ing share of in­vest­ment. In sci­ence-in­ten­sive in­dus­tries in­vest­ments in re­search out­pace in­vest­ments in equip­ment and con­struc­tion. The government pol­icy in the field of re­search, in­no­va­tions and ed­u­ca­tion will play a big­ger role in cre­at­ing an en­vi­ron­ment con­ducive to sci­en­tific progress.

The ob­jec­tive of sci­ence is not just to ac­cu­mu­late new knowl­edge, but to pro­vide ad­e­quate fi­nan­cial re­turn in re­la­tion to out­lay tak­ing into con­sid­er­a­tion the sub­stan­ti­ated pri­or­i­ties and long-term strate­gies of the government in­no­va­tion pol­icy. This pol­icy is aimed at build­ing up new ca­pac­i­ties and pro­vid­ing domestic pro­duc­ers with new com­pet­i­tive tech­nolo­gies and pro­duc­tion fa­cil­i­ties.

Devel­oped and de­vel­op­ing coun­tries have dif­fer­ent views on how eco­nomic growth tar­gets should be met. The former strive to sus­tain tech­no­log­i­cal lead­er­ship and as­so­ci­ated ben­e­fits. The lat­ter are try­ing to break to the fore­front of sci­en­tific and tech­ni­cal progress and oc­cupy their niche in the global di­vi­sion of la­bor. There­fore, coun­tries pur­su­ing ag­gres­sive in­no­va­tion poli­cies should fo­cus on cre­at­ing and build­ing up ca­pac­i­ties in a nar­row field of stud­ies and in­no­va­tive ac­tiv­i­ties. In this con­text, the cen­tral is­sue to be ad­dressed by mod­ern­iza­tion can be de­fined as “speed dif­fer­ence is­sue”. Be­laru­sian com­pa­nies up­grade their pro­duc­tion fa­cil­i­ties and re­fresh the prod­uct of­fer more slowly than the com­pa­nies set up us­ing for­eign di­rect in­vest­ments of transna­tional cor­po­ra­tions in neigh­bor­ing coun­tries.

Even hav­ing government sup­port, domestic com­pa­nies are un­able to com­pete on equal foot­ing with transna­tional cor­po­ra­tions, be­cause they lag be­hind in terms of fi­nan­cial re­sources, tech­nolo­gies, know-how and man­age­ment. Mar­ket anal­y­sis has re­vealed that man­u­fac­tur­ers who do not make part of transna­tional cor­po­ra­tions are even­tu­ally ousted from in­ter­na­tional mar­kets. At present

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