Modernization: Priorities and Essence
A country’s prosperity hinges on the pace of its economic modernization
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.
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