Индекс УДК 346.26 (574) (045)
Дата публикации: 29.04.2024

Analysis of the state of small and medium enterprise in the Republic of Kazakhstan

Dyusembayeva Lyazzat Kairatovna,
Tilepiev Murat Shapenovich,
Urazmagambetova Eleonora Uzakbaevna,
Serimbetov Murat Abutalibovich

1. master, senior lecturer
S. Seifullina Kazakh Agrotechnical University
2. Candidate of Physical and Mathematical Sciences, Associate professor,
S. Seifullina Kazakh Agrotechnical University
3. Candidate of Physical and Mathematical Sciences, Associate professor,
S. Seifullina Kazakh Agrotechnical University
4. Candidate of Technical Sciences, Senior Lecturer
S. Seifullina Kazakh Agrotechnical University
Abstract: . State regulation of entrepreneurship is designed to create the most favorable conditions for the functioning and improvement of the socio-economic efficiency of this sector of the economy. Small business is a rather multifaceted and complex economic phenomenon. On the scale of the national economy, the popularity of entrepreneurship in the Republic of Kazakhstan is increasing, but the pace of activity is quite low - the levels of entrepreneurial activity in the Republic of Kazakhstan are two times lower than the global average.
Keywords: states, small and medium-sized businesses, economy, subject, innovation, development, local resources.

Today, in the conditions of an unstable global economic situation caused by the deterioration of the investment and business climate in the country, the issues of more constructive interaction between the state and small businesses are of special significance and importance from the perspective of the socio-economic development of the Republic of Kazakhstan.

The development of the country’s economy is directly related to the situation of businesses, which provide employment and contribute to the social welfare of the population. The development of small and medium-sized enterprises (SMEs) is the foundation of any country’s economy. Without developed small and medium entrepreneurship, it is difficult to speak about the stability of the macroeconomic situation of states. Therefore, at the dawn of independence, small and medium-sized businesses were identified in Kazakhstan as the most important sector of the economy.

SMEs play an important role in the economic development of the country due to their contribution to the following sectors:

— Industrialization of rural areas;

— Development of rural areas and decentralization of industry;

— Job creation;

— More equitable income distribution;

— Use of local resources.

They are vital in the development of new industries in urban and rural areas, thus creating jobs in the areas where they are located. Small and medium-sized enterprises are less formal, with managers typically being in close contact with their employees, which does not correspond to the hierarchical management structure prevalent in large organizations. These relationship structures usually become more formal as the size of the firm increases.

At present, progress in small and medium-sized businesses is one of the priority tasks for the well-being of the Kazakh people. After all, it is an indicator of future development in both economic and political sectors. Because through small and medium-sized businesses, tax revenues to the budget are provided, which is a positive sign of economic activity. Also, the experience of developing countries shows that the state needs to stimulate small and medium-sized businesses by forming and implementing socio-economic programs.

Analysis of the trends in the development of state support systems for small businesses in the modern economy indicates an increasing role of measures of state support for enterprises engaged in scientific, technical, and innovative activities. It should be noted that in industrially developed countries, small innovative enterprises are the main focus of such state support. Thus, state care in the form of state guarantees and guarantees for loans to small and medium-sized businesses is the most common method of supporting enterprises to obtain loans from banks, which effectively reduces the risks of credit organizations. In developed countries, SMEs are provided with various benefits, subsidies, and support, help in training and retraining personnel [1].

In Table 1, quantitative indicators of operating small and medium-sized enterprises (SMEs) by regions of the Republic of Kazakhstan are presented.

Table 1

Operating small and medium-sized businesses in the Republic of Kazakhstan

TotalIncludingIncludingTotal, as a percentage of the corresponding period of the previous year
legal entities of small businesseslegal entities

medium-sized enterprises

Individual entrepreneursPeasant or farm householdslegal entities of small businesseslegal entities

medium-sized enterprises

Individual entrepreneursPeasant or farm households
Republic of Kazakhstan120737411851632238282555783389197602189637271181348217933310493
Akmola region44087447636887114324274659572611735465345510397
Aktobe region531245078394471033794656288279101378174586105102
Almaty region1150611186909826159597654531168621396869442995102101
Atyrau region4590644217684411036546240653359936726205710795
West Kazakhstan region3979740435576097276586282476291308784704106102
Zhambyl region62651568425745533990616947426857367001582110590
Karaganda region8208484878166341885670185611487219263102671210299
Kostanai region51028531787037157383205514592814742258484510488
Kyzylorda region409883814550516129825605145036330197331911192
Mangystau region498604661081408039677196364549595386951366108100
South Kazakhstan region42903173770904410139484327413922159917786791110495
Pavlodar region2855743997477213120062356275669432856348110199
North Kazakhstan region128322286836819465332368314421813521590274010484
East Kazakhstan region870119902110602176606511558285421587522715094105100

Note: compiled by the author based on information from «Express Information. Monitoring of the Number of Active Small and Medium-Sized Enterprises in the Republic of Kazakhstan,» No. 37–3/35 January 16, 2017 / website stat.gov.kz, as well as «Express Information. Monitoring of the Number of Active Small and Medium-Sized Enterprises in the Republic of Kazakhstan,» No. 36–3/336 September 17, 2018 / website stat.gov.kz. [14]

Table 1 shows the number of active SMEs as of September 1, 2018. These data are the most current at the moment. Comparing these data with the previous year, it can be noticed that the overall condition of SMEs increased by 4.2%. Of these, 64.9% are individual entrepreneurs, 18.5% are legal entities of small businesses, 16.4% are peasant or farm households, and the remaining 0.2% account for legal entities of medium-sized businesses. [3, p.1]

As of January 1, 2017, the number of active SMEs compared to 2016 decreased by 4.6%. Of these, 68.7% were individual entrepreneurs, 16% were legal entities of small businesses, 15.1% were peasant or farm households, and as for legal entities of medium-sized businesses, the share was 0.2%. [2, p.1] The question arises as to why the data as of January 1, 2018, compared to 2017, are much more positive than the data for 2017 compared to 2016? What contributed to the stimulation and ultimately resulted in the increase of small and medium-sized enterprises by 4.2%? After all, an increase in the number of SMEs indicates its development and favorable conditions.

Consumer demand and increased investment in the non-raw sector have elicited positive responses. However, concerns among them have been triggered by instability in the banking system and the growth of lending. Since we have touched upon the topic of concerns and obstacles for SMEs, 21% constitutes banking financing, 15% — decrease in demand, 12% — stagnation/fall in major regions, 9.5% — corruption, 9.2% — insufficient non-financial state support, 9% — reduction in government orders, 9% — macroeconomic stagnation, 6.3% — underdeveloped infrastructure, 6% — excessive state control, and 3% — human resources.

Observing such a trend, the question arises: how can the government stimulate small and medium-sized businesses when entrepreneurs are too concerned about the aforementioned problems? Essentially, as we can see, the main problems are banking financing, insufficient financial state support, and decrease in demand. Controlling the decrease in demand is impossible, so we do not consider this problem.

Next, let’s consider banking financing and insufficient state support. Kazakhstan’s banks face a number of funding problems. After several devaluations, funding in the global market became expensive and unprofitable for our credit organizations. As a result, loans in the market become expensive, especially for SMEs.

However, the economy needs development, businesses need growth, and banks need stability. Therefore, state financing at preferential interest rates is a significant support to help many Kazakhstani enterprises not only survive in the market but also grow actively. The plan for such financing is quite simple: the government allocates funds, and banks distribute them. In the end, these funds are loaned to entrepreneurs at preferential rates. Currently, banks are actively entering the small and medium-sized business segment. This is because they see good prospects despite certain risks. During times of crisis, lenders refrained from such actions because controlling unstable small and medium-sized businesses seemed impossible. However, global experience has shown the opposite. It remains only to choose the right policy, to select a system under which lenders and SMEs will operate. One of the banks that sees many positive aspects of such cooperation is «ATF Bank» and many others.

According to data from the Statistics Agency, the share of SMEs’ contribution to GDP was 17.4% in 2005 and increased to 20.2% by 2010 (this indicator is calculated once a year. The calculation for 2011 is expected at the end of 2012). Before calculating this indicator using the new methodology, the share of SMEs was 31.7%. Nevertheless, this is still a low figure. Therefore, the government has set a strategic task to increase the share of SMEs in the country’s GDP by 7-10% by 2020.

It is necessary to note that the low contribution of SMEs to GDP (20.2%) compared to developed countries (Germany – 57%, UK – 52%, USA – 52%, France – 50%) is due to the fact that a large share of GDP is created by large businesses (7% of large businesses create 70% of GDP, represented by the oil and mining-metallurgical sectors). This situation reflects the structure of our business, mostly concentrated in raw material industries.

As of May 1, 2019, according to the Statistics Agency of Kazakhstan, the number of registered small and medium-sized enterprises (SMEs) amounted to 1,399,451 units, of which the number of active SMEs was 604,123 units. Their share of the total number of registered SMEs was 43.2%.

By May 1, 2019, compared to the same period of the previous year, the number of active SMEs decreased by 13.3%.

The structure of active SMEs by organizational-legal forms:

— Individual entrepreneurs: 357,251 units or 59.1% of the total number of active SMEs in the Republic (604,123).

— Farms (KFH): 175,663 units or 29.1%.

— Legal entities of small entrepreneurship: 63,556 units or 10.5%.

— Legal entities of medium entrepreneurship: 7,563 units or 1.3%.

The largest number of active SMEs is concentrated in the South Kazakhstan region with 99,849 (16.5% of the total number of active SMEs), Almaty region with 96,010 (15.9%), and the city of Almaty with 66,723 (11.0%).

The smallest number of active SMEs is concentrated in the Kyzylorda region with 15,061 (2.5%) and North Kazakhstan region with 16,200 (2.7%).

As of May 1, 2019, the number of people employed in SMEs throughout the country was 2,425,315. The share of those employed in SMEs out of the economically active population (8,774,638 people) was 27.6%.

By May 1, 2019, compared to the same period of the previous year, the number of people employed in SMEs decreased by 1.7%.

In regional breakdown, it’s worth noting the highest number of people employed in SMEs in Almaty city (350,555 people — 14.5%), South Kazakhstan region (273,756 people — 11.3%), Almaty region (261,922 people — 10.8%), and East Kazakhstan region (220,440 people — 9.1%).

The output of products by SMEs in January-April 2019 amounted to 2,927,200 million tenge. Despite the fact that the share of medium-sized enterprises accounts for only 1.3% of the total number of active SMEs in the Republic, their share in the output of products is more than 60%.

Overall, medium-sized enterprises produced products worth 1,771,767 million tenge (60.5%), small enterprises produced products worth 730,112 million tenge (24.9%), individual entrepreneurs produced products worth 372,052 million tenge (12.7%), and peasant farms produced products worth 53,269 million tenge (1.8%).

Compared to the same period of the previous year, the production of products (at comparable prices) increased by 1.0%.

In regional breakdown, it’s worth noting the cities of Almaty and Astana, which account for 25.4% and 13.3% of the total production by all SMEs, respectively.

The Committee for the Development of Entrepreneurship, together with the Entrepreneurship Development Fund «Damu,» is implementing the «Business Roadmap 2020» Program, aimed at ensuring sustainable and balanced growth of regional entrepreneurship in non-raw sectors of the economy, as well as preserving existing and creating new permanent jobs.

Currently, about 30,000 entrepreneurs are covered by support measures under the «Business Roadmap 2020» program.

Under the first direction, there are 1,277 projects with a total amount of 248.38 billion tenge. Subsidy Agreements (SA) have been signed for 994 projects with a total amount of 149.0 billion tenge.

Under the second direction, there are 203 projects with a total amount of 167.497 billion tenge. SA have been signed for 162 projects with a total amount of loans of 131.35 billion tenge.

Under the third direction, there are 123 projects with a total amount of 87.19 billion tenge. SA have been signed for 99 projects with a total amount of loans of 72.0 billion tenge.

Figure 1 – Subsidization by region

Among the regions with the highest number of approved projects for subsidies within the three directions of the Program are Pavlodar, Karaganda, Aktobe regions, and Almaty city, which account for about 37.9% of the projects (608 projects).

The lowest number of approved projects is in the Kyzylorda (56 projects) and Mangystau (48 projects) regions.

For providing loan guarantees, 56 applications have been approved for a total amount of 14.32 billion tenge. Guarantee agreements (GA) have been signed for 40 projects for a total loan amount of 10.71 billion tenge.

The highest number of signed GA falls on Aktobe, South Kazakhstan, and Kostanay regions.

In terms of industry, the highest number of projects are implemented in manufacturing (48.7%). Healthcare and social services account for 17.9%, transportation and storage — 12.8%, agriculture, forestry, and fisheries — 10.3%, education and accommodation and food services account for 5.1% each.

Since 2011, the implementation of the fourth direction «Strengthening Entrepreneurial Potential» of the «Business Roadmap 2020» Program has been initiated.

Government support for small and medium-sized businesses within the Program includes support for start-up projects, service support for existing businesses, training for top management of small and medium-sized businesses, and implementation of the «Business Connections» project [11].

Figure 2 – Structure of the Program projects by industry

As part of the support for aspiring entrepreneurs, two-day express courses on the basics of entrepreneurship called «Business Advisor» are organized. Support is primarily provided to individuals with entrepreneurial initiative and existing entrepreneurs.

In 2018, «Business Advisor» courses were conducted in 219 districts, with a total of 15,654 participants receiving certificates. Among them, 74% were individual entrepreneurs, 10% were LLCs (Limited Liability Companies), 13% were peasant farms, and 3% were individuals not engaged in entrepreneurial activities.

Currently, training has begun in 5 regions: Almaty, Aktobe, Pavlodar, and South Kazakhstan regions, as well as in Almaty city.

Figure 3 – Distribution of participants by region

Рealization of the «Provision of Specialized Service Services» component is assigned to the local executive bodies. Within this framework, small business representatives are provided with services such as preparation of accounting and statistical reports, submission of tax returns, and others.

Under the service support, a competitive selection process is carried out in each region, and contracts are concluded with service companies to provide service services.

As of today, over 20,000 service services have been provided nationwide, benefiting 10,000 entrepreneurs. These services were provided by approximately 66 service companies [9].

In the first half of this year, service companies have already been identified and the process of providing services has begun in the Almaty, East Kazakhstan, Pavlodar, Akmola, and South Kazakhstan regions. In other regions, competitions are being held to determine service providers.

In the «Global Competitiveness Index 2017-2018» (GCI) ranking, Kazakhstan maintained its 50th position, surpassing Russia by 3 positions (53rd place). Kazakhstan is currently in the transitional stage from efficient development to innovative development, neighboring Russia in this phase (see figure 4). Kazakhstan’s overall average score is 4.42 (compared to 4.41 in 2013), placing the country between Italy (49) and Costa Rica (51). Throughout Kazakhstan’s participation history in the GCI ranking from 2005, this position based on scores is the best [8].

Figure 4 – Stages of economic development of countries according to the Global Competitiveness Report 2018-2019

However, it is necessary to note that significant improvements are not observed in terms of factors of innovative development (see Table 2).

Table 2

Kazakhstan’s Positions on Factors of Innovative Development

Factors of innovative development8789-2
Competitiveness of companies94913
Innovation potential8485-1
Note: [1]

In 2018, the United Nations Economic Commission for Europe (UNECE) conducted practical work on the Review of Kazakhstan’s Innovation Development, during which key indicators of innovation activity were analyzed (see Table 2).

Gross domestic expenditure on research and development (R&D) has maintained a growth trend, but not as rapidly as GDP. They declined in absolute terms in 2014 and reached 0.16% relative to GDP, whereas the ratio was 0.22% over the previous three years. However, by 2018, this indicator had not yet reached its historical peak in the observed trend. In developed countries, this figure is significantly higher: in the United States, R&D expenditure accounts for 2.6% of GDP, 2.4% in Germany, 3.0% in Japan, and 3.7% in Sweden [3,4].

Table 3

Research and Development Expenditure in Kazakhstan

Gross Research and Development expenses, billion tenge49,046,058,768,574,073,6
Share of Research and Development expenditures in GDP, %0,230,150,160,170,180,17
Research and Development expenses from the budget21,520,221,629,438,843,1
Share of budget funds in total internal costs, %55,260,249,957,362,865
Research and Development expenses per capita, tenge240720372597303435953806
GDP, billion tenge170082181627572303473527538033
Number of organizations performing research and development, units414424412,0345,0341,0-*
Note: according to [3]

Gross expenditures on research and development (R&D) in 2019 increased by 22.6 billion tenge compared to 2014. This indicates that the trend of financing R&D through budgetary funding not only persisted but also grew in volume. This suggests that the sphere of science and its development directly depend on the state and the resources of the national budget. However, the share of R&D expenditure in GDP as a percentage decreased from 0.23% to 0.17%. In other words, private expenditures on domestic R&D decreased both in absolute terms and as a percentage of GDP. Thus, R&D expenditures are also subject to general fluctuations in the country’s economic development.

An important indicator is the spending on scientific research and development per capita. Here, there is also an increase, but when converted to dollars, this indicator ranges from 14 to 20 dollars in the considered period, while in Kazakhstan, R&D expenditures per capita amount to about 70 dollars [5].

The number of organizations conducting research and development (R&D) varies from year to year, with a trend of decline. Among these organizations, the higher education sector predominates, accounting for 32.8% of the total, while the non-profit sector occupies the smallest percentage at 12%.

The expenditure structure shows a relatively high level of spending on applied sciences, with a much lower level of funding for the final stage of development. For example, over the analyzed period, on average, more than 60% of science and technology expenditures in Kazakhstan were directed towards applied research, whereas in developed countries, these indicators are around 25-30%. Additionally, around 55-60% of all financial resources are allocated to the final stage of development and commercialization.

Applied research is aimed at providing intellectual support for the innovation process as the basis for the socio-economic development of society. The knowledge gained from applied research is intended for immediate use in other areas of activity such as technology, economics, social management, etc.

When considering internal expenditures on R&D in a regional context (see Tables 4, 5), the following can be observed.

Table 4

Internal R&D Expenditures by Types of Work, million tenge

Internal costs, total38988,733466,643351,651253,161672,7
Из них:
Fundamental Research4346,64759,07682,912063,418197,0
Applied Research23802,624100,527565,828898,033369,4
Experimental and design10839,54607,38102,910291,710106,3
Note: according to [13]


As the review showed, Almaty city invests the most in scientific activities in Kazakhstan. In 2018, internal expenditures on R&D increased by 1.6 times and amounted to 30,991 million tenge. In 2019, the growth trend persisted, with expenditures increasing by 3039.3 million tenge.

Table 5

Internal Expenditures on Research and Development by Regions, million tenge

Republic of Kazakhstan38 988,733 466,843 351,651 253,161 672,766 347,6
Akmola region482,6574,5471,0631,0742,5826,7
Aktobe region492,4627,3628,1645,1559,2735,3
Almaty region537,0705,11 007,8879,01 117,4804,2
Atyrau region1 883,12 199,33 010,93 531,01 880,01 885,7
West Kazakhstan region5 589,05 099,24 175,93 959,93 773,33 040,6
Zhambyl region1 153,81 221,9198,21 485,51 077,01 322,3
Karaganda region1 206,0939,41 528,42 947,03 407,7 4 048,8
Kostanai region361,0214,7250,6329,9445,3573,9
Kyzylorda region80,880,779,5213,0213,3266,0
Mangystau region3 138,03 064,85 150,95 059,55 095,46 160,7
Pavlodar region303,3198,8385,6434,1335,3322,9
North Kazakhstan region129,8112,1101,9221,4209,6 



East Kazakhstan region357,9450,7440,5930,61 168,51 233,8
Astana4 448,54 445,69 280,910 376,39 741,210187,7
Almaty18336,213 319,816 287,619 061,530 991,034 030,3
Note: according to [3]

The top five regions contributing to R&D investments consistently include, in descending order, Astana, Mangystau region, Karaganda region, and East Kazakhstan region. Although the latter led the rankings and only yielded to Karaganda region in 2019. These regions are represented by major industrial and financial centers of the republic, but in terms of the level of innovation activity of enterprises, they significantly lag behind other regions.

Figure 5 — Level of innovation activity of enterprises by all types of innovations by regions in 2019

The indicator of the level of innovation activity of enterprises is calculated as the ratio of the number of enterprises with innovations to the total number of surveyed enterprises. This indicator is based on a comprehensive assessment of the enterprise’s innovation activity: susceptibility to novelties, intensity and timeliness of actions taken to transform innovations, ability to mobilize the potential of the required quantity and quality, ability to ensure the validity of the methods used, rationality of the innovation process technology in terms of composition and sequence of operations.

If the following factors of the innovation process of the company, which are summarized in the so-called «diamond of innovation activity» (Figure 6), are taken as a basis, then the innovation activity of enterprises in the above-mentioned regions of the republic is largely based on resource provision — natural, financial [6].

It is important to separately highlight the Kyzylorda region, which ranks among the lowest in terms of expenditures on R&D and technological innovations, but leads in the indicator of enterprise innovation activity.

The innovation activity of enterprises in terms of product, process, organizational, and marketing innovations reached 12.0%, while for product and process innovations alone, it was 5.0%. The highest level of activity in innovation across all types was observed among large enterprises, reaching 29.3%.

Figure 6 — Innovation Activity Rhombus

However, this indicator is not exemplary. For comparison, the share of innovation-active enterprises in Germany is 80%, in the United States, Sweden, Italy, and France — around 50%, in the Russian Federation — 9.1%.

Thus, it can be concluded that there is a misperception among Kazakh entrepreneurs about the innovation process and its life cycle. The innovation process is not seen as a means to increase financial efficiency and competitiveness under any financial and economic conditions of the country. Kazakh entrepreneurs do not take into account that most of the largest companies in the United States and the European Union have achieved their level of success not through traditional business practices but through the establishment of effective innovation management.

The need to reassess the factors of the innovation process is dictated by the practices of foreign countries, where over time, innovation-inactive enterprises have simply been ousted from the market. And in the context of the development of integration processes in the post-Soviet space, Kazakh enterprises may be displaced by Russian ones, as the innovation activity of Russian enterprises is almost twice as high as that of Kazakh ones. Let’s consider enterprises by types of innovations (Table 6).

Table 6

Number of enterprises by type of innovation for 2019

Number of enterprises with at least one type of innovationOf them:
Enterprises with product innovationsEnterprises with process innovationsEnterprises with marketing innovationsEnterprises with organizational innovationsEnterprises with all 4 types of innovations
Republic of Kazakhstan117468176833461728
Akmola region8327151832
Aktobe region682125288
Almaty region126444523432
Atyrau region4120232
West Kazakhstan region342434641
Zhambyl region7528305401
Karaganda region148465713673
Kostanai region16448373271
Kyzylorda region85233321692
Mangystau region203888
South Kazakhstan region12910212614109
Pavlodar region95334912301
North Kazakhstan region114308457
East Kazakhstan region99446515131
Note: according to [3]

The leader in having all 4 types of innovations is the South Kazakhstan Region with 9 enterprises, followed by the cities of Almaty and Astana with 4 enterprises each. To understand and analyze the reasons hindering innovation development in Kazakhstan, let’s examine the following tables.

Тable 7

Indicators of innovation activity by enterprise size by region for the year 2019

By smallBy middleBy large

The number of enterprises, units

Of them:Level of activity in the field of innovations, % 

The number of enterprises, units

Of them:Level of activity in the field of innovations, % 

The number of enterprises, units

Of them:Level of activity in the field of innovations, %
Enterprises having innovationsEnterprises having innovationsEnterprises having innovations
Republic of Kazakhstan174856924,0316466321,0142141929,5
Akmola region795455,6290217,2881719,3
Aktobe region844192,31322922,0682029,4
Almaty region1073555,11674225,1782937,2
Atyrau region696121,7521936,5501020,0
West Kazakhstan region553101,8621321,0311135,5
Zhambyl region555305,41122421,4672131,3
Karaganda region1516453,03035718,81384633,3
Kostanai region1001494,92877124,71054441,9
Kyzylorda region501357,01332821,1752229,3
Mangystau region61220,4164127,36269,7
South Kazakhstan region1603452,82964715,91103733,6
Pavlodar region902384,21442920,1722838,9
North Kazakhstan region679416,13065518,0621829,0
East Kazakhstan region1501382,61142925,41523221,1
Note: according to [3]


rom the table, it is evident that the innovation potential of large enterprises is more productive than that of small and medium-sized ones. Large enterprises typically purchase ready-made technologies or products abroad, whereas there is a need to develop their own innovation sector by creating new high-tech directions, actively involving small innovative companies in production.

Global experience shows that if a state aims for dynamic and sustainable development, its socio-economic programs must include measures to stimulate small and medium-sized businesses. In all market-oriented economies, small and medium-sized enterprises constitute a significant portion, with developed countries concentrating them in innovation production.

However, it is worth noting that the distribution of innovative products in the total volume of industrial enterprises’ own production was only 2.7% in 2019 (2.4% in 2010; 1.2% in 2015). Eastern Kazakhstan and Pavlodar regions were the leaders in implementing innovative products in 2019, accounting for 18.4% and 17.3%, respectively.

Table 8

Distribution of the volume of implemented innovative products of industrial enterprises by regions in 2019, million tenge

Total volume of implemented innovative products

Начало формы

New or significantly improved goods (services) that are new to the marketNew or significantly improved goods (services) that are new to the organizationНачало формы
Republic of Kazakhstan487271,0315074,6172196,4
Akmola region17402,24749,712652,4
Aktobe region8079,73510,94568,8
Almaty region12218,81427,510791,3
Atyrau region37914,415019,622894,8
West Kazakhstan region9098,52100,76997,8
Zhambyl region21495,71188,520307,1
Karaganda region34123,81028,833095,0
Kostanai region29050,322347,16703,2
Kyzylorda region6156,2286,55869,7
Mangystau region1395,4596,8798,6
South Kazakhstan region37134,927350,89784,1
Pavlodar region84062,667236,816825,8
North Kazakhstan region13409,77869,15540,7
East Kazakhstan region89527,179187,710339,5
Note: according to [3]

Technological innovations represent the end result of innovative activities, embodied in the form of a new or improved product or service, introduced to the market, a new or improved process or method of production (transmission) of services used in practical activities. Technological innovations can be both products, processes, services, and methods that the organization develops for the first time, as well as those that are adopted from other organizations.

As seen from the table, expenditures on technological innovations have been increasing annually on average by 1.5 times. However, the rates of change vary. Sharp changes were observed in 2017 and 2018. The most significant dynamics were observed in expenditures from the local budget, the amount of which increased by 149 times in 2017, from 44.2 million tenge in 2017 to 6613.4 million tenge in 2017. However, in 2018, the funds from the local budget allocated for this purpose decreased by 1273.9 million tenge. In crisis years, funds from the local budget sharply decreased, which consequently affected the reduction in funding from the republican budget in 2019.

Table 9

Expenditures on Technological Innovations by Enterprises, million tenge

Republic of Kazakhstan61050,9235501,7194990,9325639,3431993,8
Akmola region389,5911,43951,610356,410632,8
Aktobe region1670,328818,031438,056039,646423,3
Almaty region90,437,92923,414971,97423,6
Atyrau region88,5422,614447,215838,925895,7
West Kazakhstan region414,362,147344,13053,310692,9
Zhambyl region811,211132,311444,418853,816901,0
Karaganda region1857,83563,28809,99319,232782,7
Kostanai region66,433,4709,16722,916011,1
Kyzylorda region199,019819,72911,44558,26728,7
Mangystau region1659,9648,99138,46014,7
South Kazakhstan region713,09262,718648,911208,226382,1
Pavlodar region28834,011023,07895,35197,313249,2
North Kazakhstan region301,0478,9184,913985,012852,4
East Kazakhstan region18787,7141842,232926,133393,228225,3
Note: according to [3]

The activity of small businesses in Kazakhstan over the last 5 years has shown a positive trend. For example, in August 2013, the number of active small enterprises was 102.5 thousand, in August 2015 — 121.3 thousand, and in August 2017 — already 135.4 thousand enterprises. The average annual growth rate of the number of active small legal entities (as of August) is 8%.

Figure 7 — Active Small Enterprises (thousands units)

As before, Almaty remains the main consolidator of small businesses with 33.8 thousand units (compared to 31.3 thousand units the previous year). In the capital, there are 25.3 thousand small businesses (compared to 16.2 thousand units the previous year). Also among the top three regional leaders is Karaganda region, where the number of active small legal entities amounts to 10.6 thousand units (compared to 10.4 thousand units the previous year). Nearly half of all active small businesses in the country, 46.4% or 69.7 thousand enterprises, are concentrated in these three regions.

Figure 8 — Active Small Enterprises (thousands units)

Note: Figure 8 is based on the data from the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan.

Kazakhstan’s small business continues to concentrate in three major sectors: wholesale and retail trade; repair of motor vehicles and motorcycles — 35.9 thousand companies (23.9% share), education — 14.8 thousand (9.9% share), and construction — 14.5 thousand (9.7% share). The share of the top three types of economic activity of small enterprises is 43.5% (65.3 thousand enterprises).

At the same time, the fastest-growing sectors are accommodation and food services (an increase in the number of active companies by 21% in a year) and electricity/heat supply (up 20.9% year-on-year). Together, these two industries account for 2.8 thousand small enterprises.

Table 10

Types of Economic Activity of Active Small Enterprises (thousands units)

Wholesale and retail trade; repair of motor vehicles and motorcycles35,931,613,8%
Professional, scientific and technical activities11,19,812,9%
Real estate activities9,18,48,4%
Public administration and defense; compulsory social security8,68,60,3%
Manufacturing industry7,46,88,5%
Activities in the field of administrative and support service7,46,317,4%
Agriculture, forestry, and fishing6,56,16,5%
Transport and warehousing5,85,112,9%
Information and communication3,93,318,5%
Financial and insurance activities3,83,65,5%
Health and Social Services3,02,710,7%
Arts, entertainment and recreation2,62,49,9%
Accommodation and food services2,41,921,0%
Mining and quarrying1,00,916,2%
Water supply: sewer system, control over waste collection and distribution0,90,88,0%
Electricity, gas, steam and air conditioning0,40,320,9%
Provision of other types of services11,29,320,5%
Based on the data from the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan.                                                                       Finprom.kz

In turn, private enterprises cover the majority of expenses (Table 11), most of which come from the enterprises’ own funds (Table 10).

Table 11

Expenditures on technological innovations by forms of ownership, million tenge

State ownership4691,67839,68091,49194,5
Private ownershi41074,3218666,4137451,5282167,9
Ownership of other states, their legal entities, and citizens15285,08995,749448,034276,9
Note: according to [58]

Table 12

Expenditures on technological innovations by funding sources, million tenge

Republican budget4968,35516,612873,137402,917465,6
Of them:
Development institutions funds682,82949,712390,85730,817465,6
Of them:
innovation grants230,9808,9228,91119,02821,0
local budget378,444,26613,41273,93743,4
own funds54059,9219441,9114565,8153425,0285044,4
Note: according to [3]


On the one hand, this is a positive trend, but on the other hand, domestic enterprises mostly lack sufficient financial resources to carry out large-scale creation and implementation of technological innovations in industrial production.

Overall, it can be noted that the share of expenditures on technological innovations in the country’s GDP is about 1%. For example, in 2019, the share of expenditures in the country’s GDP amounted to 1.22%, which is twice as much compared to 2015 (see Table 13).

Table 13

Share of expenditures on technological innovations in the country’s GDP, billion tenge

Expenditures on technological innovations by enterprises61,1235,5195325,6432
Note: Calculated by the author based on the data [58]

Although there is a tendency for these expenditures to increase from year to year, it can still be argued that the funds allocated for technological innovations are insufficient. The experience of economically developed countries indicates that up to 75-80% of GDP growth is attributed to new knowledge embodied in technologies, equipment, and production organization in industrially advanced countries.

One of the target indicators of the Program for the Development of Innovations and Technological Modernization Promotion in the Republic of Kazakhstan for 2014-2018 was to increase expenditures on technological innovations in industry to 98,000 million tenge in 2019. As seen from the table, this threshold was surpassed in 2015 with a significant margin, reaching 121,571.2 million tenge. Expenditures on technological innovations in industry account for more than 50% of total expenditures.

Table 14

Expenditures on Technological Innovations in Industry, million tenge

Republic of Kazakhstan31034,8219571,2170174,3168477,1219263,3
Akmola region284,7629,53626,86567,98891,4
Aktobe region1305,625667,329374,152788,343305,3
Almaty region1,336,41542,11780,35625,5
Atyrau region323,814265,614288,120488,1
West Kazakhstan region366,10,046888,21364,38203,1
Zhambyl region420,310447,98244,916530,815041,7
Karaganda region688,82204,16900,94989,725168,0
Kostanai region8,133,3526,41884,013676,1
Kyzylorda region8,317760,02673,53738,54325,5
Mangystau region1630,60,0414,99041,55962,0
South Kazakhstan region385,98504,913912,63732,918388,5
Pavlodar region9489,010808,06995,04136,812064,9
North Kazakhstan region47,3325,463,77675,65986,7
East Kazakhstan region15344,2139824,730366,823211,224930,2
Note: according to [13]

In 2019, among the leaders in the implementation of expenditures on technological innovations were the Aktobe, Karaganda, and East Kazakhstan regions, which are among the major industrially developed regions of Kazakhstan.

Aktobe region is a powerful base for mining and metallurgical, chemical, oil, and instrument engineering industries. More than 900 enterprises are involved in industrial production. Karaganda region is the largest in terms of territory and industrial potential, rich in minerals and raw materials. Among the basic sectors of the economy are power engineering, fuel, ferrous metallurgy, mechanical engineering, and chemical industry.

The basic industry of the East Kazakhstan region is non-ferrous metallurgy, as well as the development of engineering and metalworking, energy, forestry and woodworking, light, and food industries.

Table 15

Ratio of Innovation Product Volumes to Expenditures, billion tenge

Research and Development Expenditure Efficiency Coefficient2,660,651,382,252,64
Note: Calculated by the author based on the data [3]

As a result, in 2018, for every tenge spent on such expenditures, there was 2.64 tenge of innovative products, essentially proportional to the ratio in 2014 [8,9].

One of the key performance indicators was defined as the assessment of the efficiency of expenditures on the development and implementation of technological innovations (the ratio of the volume of innovative products to the volume of expenditures on technological innovations) (Table 15).

Table 16

Planned and actual ratio of volumes and expenditures on innovative products

Plan –

Evaluation of the efficiency of expenditures on the development and implementation of technological innovations

Fact — Coefficient of efficiency of expenditures on research and development2,660,651,382,252,64
Note: Compiled by the author

Thus, the increase in funding directed towards research and development has not led to a significant growth in the innovation activity of enterprises. Overall, the level of government involvement in the innovation process remains high. This is positive in that it reflects the active participation of the government as a key player in the innovation market, serving as a locomotive and leader in the development of innovative processes. Many structural expenditures (investments) in innovation development, especially in times of crisis, are possible only with government involvement. However, this can lead to a one-sidedness in innovation development, where private businesses withdraw from it. There needs to be a certain balance in the participation of various forms of ownership in innovation work, and various measures of government support are necessary for proportional and balanced interaction between private enterprises and state-owned enterprises.

It is also important not to forget about government programs aimed at supporting the development of small and medium-sized businesses (SMEs). Currently, the most well-known program working on such principles in Kazakhstan is the Unified Entrepreneurship Support Program «Business Roadmap 2020». It specifically develops the SME sector. The actions of the program have been extended until 2025. An additional amount of at least 30 billion tenge annually should be allocated for its implementation. This will allow for the creation of at least 22,000 new jobs over 3 years, generate 224 billion tenge in tax revenues, and produce goods worth 3 trillion tenge.

Thanks to the launch of the state program «Business Roadmap 2020» since 2010, the range of entrepreneurship support tools through the Damu Fund has significantly expanded. In particular, subsidizing interest rates on loans to small and medium-sized enterprises (SMEs), guaranteeing loans to SMEs, and the extensive implementation of training programs and consulting support for SMEs have been initiated. The Damu Fund provides financial and non-financial support to small and medium-sized enterprises.

Types of financial support include:

  • Preferential lending through second-tier banks under targeted programs for regions and specific industries, microfinancing through microfinance organizations.
  • Subsidies – reduction of interest rates on loans for business development provided by banks.
  • Guarantees – providing partial guarantees as collateral for bank loans.

Types of non-financial support are provided at Entrepreneurship Service Centers:

  • Free seminars and workshops on various business topics.
  • Free consulting and service support on key areas of business management and government support programs for SMEs.

The Damu Fund, through its programs supporting small and medium-sized businesses (SMEs) with funds from the National Fund, has had a significant impact on businesses like «Kokshe Building Service». Founded in 2013, «Kokshe Building Service» initially had a production capacity of 30 cubic meters of products per hour, primarily producing concrete, cement, and reinforced concrete structures.

With the assistance of the Damu Fund offering favorable financing at a subsidized interest rate of 6% per annum, the company was able to expand its operations and acquire its own production complex. This allowed the company to save on rent expenses and redirect those funds towards creating additional jobs, expanding production capacity, and diversifying its product range. As a result, «Kokshe Building Service» has increased its production capacity to 120 cubic meters per hour.

Furthermore, the company has received recognition for its achievements, including being awarded the «Gold» rating in the National Business Rating of Kazakhstan in the field of manufacturing prefabricated reinforced concrete and concrete structures. Overall, this case demonstrates the growing demand for loans through government programs and their positive impact on SMEs. In fact, the number of new SME clients at the bank increased by 65% in 2018, and the overall volume of lending grew by 116% [10].

Therefore, the problem associated with insufficient government support is being addressed. In stimulating SMEs, studying the environment in which entrepreneurial activity takes place plays a crucial role. The concept of «business environment research» refers to a policy element aimed at supporting and studying SMEs, which helps prevent instability and unpredictability that could lead to decreased investments and slow growth in future prospects. «Based on this, the Secretariat of the Committee for SME Development of the National Chamber of Entrepreneurs «Atameken» conducts surveys of SMEs to obtain timely information about the business climate in the Republic of Kazakhstan.» [5, p.1].

In conclusion, support for small and medium-sized enterprises is implemented through government, sectoral, and regional programs, comprising a set of measures aimed at their development and support. At this stage, small and medium-sized businesses in Kazakhstan hold a fairly high rating of potential that can be realized over time. It remains only to continue working diligently in the same direction as now.

For the development of innovative processes, it is essential not only to have government support but also society’s readiness to adopt new technologies, as well as active involvement from business circles. Forming healthy competition, a civilized innovation market, enhancing business ethics, and respecting intellectual property rights are all key factors for success in shaping an innovative economy.

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