Friday, May 4, 2012

Project Management

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Kazakhstan Institute of Management Economic and Strategic Research

Argumentative Paper

The entry into the Market Economy and Development of socialeconomic reforms in Kazakhstan


Executed by
Beisenov Tamerlan

Lecturer
Philip Leatherwood

Almaty 2001 year

Contents


1. Introduction.

2. Peculiarities and problems of economic reforms in Kazakhstan.

3. Social and economic results of conducting reforms.

4. Conclusions and suggestions.


1. Introduction.

In 1991 the Republic of Kazakhstan had proclaimed its own independency. Of course these events caused new social and political formation.

Already in the first years of its formation Kazakhstan had vividly raised authority and prestige. In assistance to this there were a number of essential and progressive approaches in external politics of Kazakhstan full refusal from nuclear weapon; proclamation of itself as a secular and democratic republic; an open doors to all, mutually profitable external interrelationships.

In a word, Kazakhstan entered into the world association as competent member and participant of all interrelationships. The majority of countries, including highly developed among them, began to study our republic with a big interest. There were a lot of other positive events, which went on in favor of sovereignty and integrality of young republic.

However, beyond the tempo of social and political changes the economic reforms were lagging behind. Indus-trial enterprises stopped their work, agriculture reduced its former scale, and there was a vital shortage of national goods. Remarkably worsened the well being of population. In this kind of situation many questions had risen up, how and with help of which methods to organize the economy of former soviet Kazakhstan. In most countries of the world, for long time existed and proved itself the Market methods of Economy. Therefore, it became obvious and profitable to choose the Market Economy.

2. Peculiarities and problems of economic transforma-tions in Kazakhstan.

Thus, in the beginning of nineties after declaration of independency - Kazakhstan had begun to solve problems of reformation the economy with a tendency to the business undertaking, private property and to other forms of market method economy. Everything was perfectly understood by the leadership of the country, that only on this way they could expect gradual upgrading of the economy. Highest Economical Council had been created in the presence of President of the republic to attract young and perspective economists, financial experts, solicitors etc. Also a lot of experienced advisors were invited for successful conduc-tance of reforms in the country.

Question rises, why Kazakhstan chose exactly this way of reformation in economy, which reasons impelled Kazakhstan to get over on the market method of running the economy.

Firstly, former planning economy system was fully destroyed in fact practice showed that it was ineffective. Secondly, proclaiming itself as modern, democratic and civilized State Kazakhstan understood that to join in and become a member of world economic communications only after installa-tion of generally accepted market relationship. Thirdly, bring up the whole amount of human, capital and natural resources into active condition. In order to do this, it was necessary to attract foreign technologies and investments exactly from those countries where market methods of economy showed it effectiveness.


However, it was only a beginning of difficult way of transformations. Everything began from concept called “shock therapy”. There was quick liberalization (free formation) of prices in its basis. There was an expectation that prices will rise three times bigger, but actually they have risen up to 10-12 times. Possibilities of population are turned out to be on the same level, and therefore a main problem sprang up a big none correspondence of supply and demand on the market of goods and services.

The next step of economic reforms became complicated because natural, social, economic and other peculiarities of Kazakhstan are not always been taking into consideration.

The most important thing is at there was a great dispro-portion in the country between outputting and converting branches. Most useful, daily and necessary population pro-duction was made up to 80% beyond the borders of former USSR. Besides this, at the beginning of the reforms singular economic complex does not existed anymore. It had a par-ticular negative significance for Kazakhstan, because about 0% of enterprises had been running by the former center.


Also Kazakhstan in contradistinction to East European countries: Poland, Hungary, Czech Republic etc. had never got an experience of private proprietor, because the psychology of owner and businessman was suppressed for a long time.

There was another important peculiarity the country had.

Kazakhstan obtained big volumes of oil, gas, coal and other types of natural raw materials. Of course we had to keep them in safety and develop them with the help of provided investments.

Finally, there was a vital shortage of specialists managers, financiers, programmers and etc. to be allocated among different directions of developing economy of Ka-zakhstan.

Undoubtedly, all this things, were taken into consideration on the first step of reforms, therefore running meas-ures became complicated. For example a level of Gross Product reduced twice as in 1 year in comparison to 10 year.

The volume of output produced had reduced for three times, in agriculture for 4-5 times.
It was necessary to analyze and take into consideration all this factors and peculiarities in the next programs of economic transformations. Leadership of the republic executed a correction, of running measures, taking into consideration all this peculiarities and this rendered its own positive influence on the next steps of economic reformation.

3. Social and economic results of conducting reforms.

Today, at the beginning of 2001 year, we are able already to evaluate the results of economic development in indus-try, in financial branches, in social sphere and in other directions of living standard.

Of course, not all of them are positive, there are even undesirable facts of development, but all of them require deep analysis and search of new efficient ways of develop-ment.

After all this, there is a main question left does this concept justified itself by going over the market economy and does this transformations has their own progressive per-spectives. Today with help statistical data we can confi-dently say that, this transition on market methods of economy was the only real entrance from the difficult position happened at the beginning of nineties in the economy of Kazakhstan. Data tells us that during months of the year 2001 the volume of industry production made-up 111,1% which corresponds the period of previous year. (Figure 1)


The accrued average salary level remarkably grown up from 6 841 tg (in 1996) to 1 761 tg (in 2000). However consumer’s capability (in corresponding prices in that pe-riod) haven’t changed very much and even decreased on particular type of products because of disparity in price grows.

The level of Gross Product per capita also increased from 65.1 thousands of tenge (in 1995) to 174,6 thousands tenge (in 2000).  In comparison with CIS countries Kazakhstan’s salary level takes the leading place. As we already mentioned there is also a disproportion in price grows and in population income.

This shows us that possibilities of population are lagging behind from the supplies grows on market of goods and services. Also the number of unemployed is decreasing. Here comes the first and the main problem to increase the number of busy people, to create new working places, to increase the minimal level of wage, pension and allowance.

Foreign companies were invited into country to maintain the industry in stable working condition and working places to be full, which took by agreement the certain large indus-try branches. This purpose help to pay the salary debts and enterprises continued working.

It is important to notice that for the last years the number of investments increased from $801 million to $1.5 billion in 2000. This increase in the volume of manufacture touched upon mining and metallurgical industries.

The market methods of economy gave an enlargement of enterprises in small and middle business. In 17 there were 17 000 of enterprises and number increases to 7 000 at the end of 2000 with 18.5 thousands of human re-sources involved. Government taken some measures being conducive to simplify the authorize documents.

At the same time we should say that this running of the reforms was necessary in Kazakhstan because of enterprises bankruptcy, liberalization of prices, by division of society into rich and poor and payable healthcare and education reduced manufacture and consumption of some goods and services. This type of dynamic for the 16-000 is shown in (Figure 4).

Hence, new social economic relationships, which are actively developing today, are rendering an immediate influence on going on processes in society. To estimate consequences of economic reforms on standard of living, we can use such kind indicators the living conditions, level of educations and healthcare, ecology and other.

In my point of view economical position in the country is still intensive. Therefore for effective solving of this problems it is necessary to Kazakhstan to make constant correction in its’ approaches.


4. Conclusions and suggestions.

Finishing this analysis of economic transformations, it is important to express the fundamental idea -  how to evaluate in general the economical position in the country.

Of course it is difficult to population in this time changes. Worldwide practice shows that in all countries, which are using market way had there own difficulties. They happen to be in Kazakhstan too. But we are able to evaluate the current reforms as positive and progressive events. That confirms big scales in small business, gradually appearing feeling of private property and household of he own busi-ness.

Of course we still have got enough qualitative native goods.


Recently the have been imported from abroad meanwhile analysis showed that we can manufacture them here. In order to protect internal market Government increased custom charges on imported goods. It is important, because the enlargement of native manufacture will increase the number of employed people and received taxes into budget of the country. In the same way to increase employment lo-cal authorities organize social types of work construction of highways, planting of trees, cleaning the residential areas and other. Taking into consideration that we have a lot of useful minerals we necessarily have to increase the volumes of investments in the future, creation of partnerships and installment of modern technologies. At same time we should pay attention on preparation of specialists from uni-versities and institutes. Today we have approximately 150 High schools 100 of them are private. Time is showing that quantity of students has risen, but not all of them can find their job. That’s why most universities are opening the cen-ters of career of professional adaptation and services to job vacancy.

Also for successful development of market relationships in Kazakhstan we should upgrade managing structures, poli-tic of tax charging, visa and other formalities. We should also increase the number of competitor goods and services, to strengthen the national currency and being able to achieve positive difference in external trade.

Bringing up the results to what we have said we can make a conclusion that the transition to the market economy have been successfully accomplished and gets its development. Now taking in consideration all aspects the main thing is to run this reforms without any hesitation, making them rich in content and efficient to population of the Republic of Kazakhstan.



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