ASTANA, May 23, 2014 –Having natural resources does not have to be a curse, it can be a blessing if the countries ensure proper management of revenues from natural resources, invest earnings in building up physical and human capital, and improve institutions, says the World Bank’s in the report “Diversified Development: Making the Most of Natural Resources in Eurasia” presented during Astana Economic Forum.
“The experience of resource-rich countries around the world shows that diversification of exports or production may be neither necessary nor sufficient for development,” said Laura Tuck, World Bank Vice President for Europe and Central Asia. “Our new report recommends that governments in the Eurasia region need to worry less about diversifying their exports or production, and think more about building diversified national asset portfolios – to ensure better balance between natural resources, built capital, and economic institutions.”
According to the report, Eurasia’s portfolios are currently heavy in tangible assets such as oil and gas, schools and hospitals, and in some cases roads and railways. At the same time they are lagging behind more successful countries in intangible assets such as education levels, quality of healthcare, and institutions for managing volatile resource rents, providing high-quality public services, and effectively regulating private enterprise.
“The main observation of the report is that diversified development is the result of successful development and not the cause of successful development,” said Hans Timmer, World Bank Chief Economist for Europe and Central Asia. “Successful countries will diversify in a natural way, as they diversify their assets and improve institutions. Forced diversification, for example by subsidizing new industries, if it is not consistent with the country’s endowments, will almost always fail as it usually results in economic inefficiency.”
The report studies economic development in the twelve countries of Eurasia, where six countries are rich in natural resources: Azerbaijan, Kazakhstan, Russia, Turkmenistan, Ukraine, and Uzbekistan, and the other six countries are not: Armenia, Belarus, Georgia, Kyrgyz Republic, Moldova, and Tajikistan. In the last two decades, natural resources have played a central role in the development of the whole region, as countries which are rich in natural resources grew their wealth and shared their prosperity with the rest of the region through trade, migration, investment or aid.
The report finds that the wealth of natural resources has served Eurasia well so far, helping improve the living standards for most of Eurasia’s 280 million people. Since 2000, individual incomes increased fivefold, and health and education services have improved. The most impressive achievement is the remarkable poverty reduction in the region, as poverty has fallen to half of what it was in the 1990s. All these improvements coincided with high and rising commodity prices.
“To address the challenge of high volatility caused by unstable commodity prices, the policymakers in Eurasia may wish to learn from the lessons of other resource-rich countries, both successful and unsuccessful,” said during presentation Ivailo Izvorski, World Bank Sector Manager for Economic Management and Poverty Reduction in Europe and Central Asia and a report co-author. “Our analysis shows that resource-rich countries that made early improvements in the quality of essential services and the regulation of private enterprise were more successful in controlling volatility and becoming sustained high-income economies.”
The report suggests that better economic institutions in all Eurasian countries could enhance the stability and reduce the volatility of public finances, improve education and infrastructure to make workers more productive, and strengthen the competition regimes to encourage private enterprise and entrepreneurship. Stabilization, education, and competition are identified as three priorities for the Eurasian countries for the next decade.
According to the report, success in overall development in resource-rich countries is directly linked to how successful countries are in converting their resource revenues into built capital, such as infrastructure and healthy and skilled population. The report recommends that both resource-rich and resource-poor countries in Eurasia may wish to make a big push to improve their infrastructure, such as roads and railways, pipelines, electricity grids, and communication networks. Generally, resource-poor countries in the region lag behind their richer neighbors in infrastructure, but they have been steadily increasing public investment and managed to boost their per capita physical capital by almost a third in 2010 relative to 2005. The countries where investment in physical capital could help the most are Russia and Ukraine.
For every other country in the region, the more urgent investment is in human capital, especially education. International assessments of the quality of education show that the region is lagging significantly. The report suggests that Eurasian resource-rich and resource-poor countries can benefit from both spending more and improving the efficiency of public spending in education.
Another important finding of the report is that integration into global markets is a key factor of success, as it helps create prosperity regardless of diversification. The report compares three sub-regions – East Asia, Central Europe, and Eurasia – and draws the conclusion that all of them succeeded by integrating into global markets using their comparative advantage: labor in East Asia, capital in Central Europe, and natural resources in Eurasia. Eurasia can do even better by expanding its trade with East Asia in addition to strengthening established links with Western Europe.
In Washington: Elena Karaban, (202) 473-9277, email@example.com
In Astana: Shynar Jetpissova, (7172) 691 440, firstname.lastname@example.org
For more information on the World Bank’s work in Emerging Europe and Central Asia, please visit:
Svyatoslav Anatolyevich Timashev. Collective Nobel Peace Prize 2007 – Honored Scientist of the Russian Federation
Svyatoslav A. Timashev is a member of the Interstate Council on the issue of “heavy reliability pipelines”, a member of the Scientific Council and the Dissertation Council, the American Society of Mechanical Engineers (ASME), the editorial boards of domestic and foreign journals and a founding member of the International Association for design reliability and safety.
Svyatoslav A. Timashev, a Russian citizen, was awarded a collective Nobel Peace Prize for developing methods of CO2 sequestration from the earth’s atmosphere and its disposal, together with a group of scientists of the Intergovernmental Panel on Climate Change, who together formed the International Meteorological Organization and the United Nations Department of Environmental Protection in 2007.
For his achievements, Svyatoslav Anatolyevich was awarded the VSNTO (All-Soviet Union Council of Technical Society) (1969), the medal “For Valorous Labour” (1970), the Expert Public Education Badge (1984), a COMADEM Magazine prize for the best publication in 2000, and was dubbed Knight of Justice – Commander of the Sovereign Order of the Orthodox Hospitaller Knights of St. John of Jerusalem.
S.A. Timashev shaped a new direction in the theory of reliability of large mechanical systems, solved the problem of optimization of the critical systems operation in multi-level governance class. He is the holder of nine copyright patents and author of more than 250 publications, including 19 monographs.
Svyatoslav Anatolyevich created software systems for the optimal management of the operation of oil and gas pipelines, three generations of industrial electronic systems of vibration protection, vibration diagnostics, tribodiagnostics and monitoring of energy machinery and equipment and is the founder of a new section in the theory of reliability monitoring.
He developed the scientific bases of the theory and a fundamentally new method for optimizing the operation of a complex object by the criteria of reliability and safety, as problems of multilevel governance of stochastic processes of degradation and recovery. These systems are used successfully in the Russian oil and gas industry, aviation, heavy engineering, metallurgy and other industries, as well as in university educational laboratories.
All these works have received wide domestic and international recognition, as evidenced by the election of S.A. Timashev as a member of the RF Academy of Quality Problems, a member of the Washington Academy of Sciences (USA) and the Fulbright Academy of Science and Technology (USA).
On July 26 the laureate S.A. Timashev celebrates his 79th birthday and the 58th anniversary of the start of science teaching career. He was born in Harbin, northeastern China, one of the main transit points for trade with Russia. He graduated with distinction from the Ural Federal University (formerly the Ural Polytechnic Institute).
From 1987 to the present time Professor Timashev has been the head of the Reliability Laboratory of the Engineering Complex Problem Division at IMET UNC AN SSSR. He is also Director and Academic Advisor at the Science and Engineering Center “Reliability and service life of large systems of machines” at UNC AN SSSR.
VIDEO Astana Economic Forum. Interview with Eric Maskin: Kazakhstan can be a force for modernization in the Eurasian region
Interview taken by Razvan Buzatu, from www.caleaeuropeana.ro, with Professor Eric Maskin, PhD, Nobel Laureate for Economics, Adams University Professor at Harvard University.
He is renown at international level for laying the foundation of mechanism design theory. During his career, he contributed to game theory, contract theory, social choice theory, political economy as well as other areas of economics.
Razvan Buzatu: Professor Maskin, thank you very much for accepting this discussion for Calea Europeana. First of all: why Astana?
Eric Maskin: Well Astana is now holding one of the big economic forums in the world so it’s a natural place for people who are interested in issues of our time to meet. So, I’m glad to be one of the many participants.
RB: Well, Astana these three or four days is becoming the center of the world, right, and speaking about economics and how the world works at this moment, how do you see Kazakhstan involved in the global economy?
EM: Kazakhstan has an interesting position economically and geographically. It’s close enough to Europe so that it has close ties there, but it’s also close to the Far East and given its pivotal location we can expect great things from Kazakhstan in the future.
RB: Do you think that it can play a regional role in the Eurasian region?
EM: I hope it does. Kazakhstan seems to be forward looking, progressive country and I think it can be a force for modernization in the Eurasian region.
RB: Professor Maskin you’ve designed a well known design mechanism theory, and I was wondering if you can share with us a little bit of your thoughts on how can design mechanism theory, involving also Kazakhstan, can have positive implications on the European Union economy and Eurasian economy.
EM: Well, mechanism design theory is all about how do you create the institutions for aligning incentives. Of course, each country has its own goals which are not necessarily exactly in alignment with other countries’ goals and it is the function of international institutions to reconcile possible conflicts, this could be done through international organizations, through treaties, through political unification, but mechanism design teaches us that is not enough to, say, write a treaty, say, to promote trade, but the treaty has to be written with care to make sure that all the countries who are going to be signing this treaty actually benefit from it and that may involve a series of concessions on both sides, concessions about giving something up but the benefits from conceding is that now you have an international institution which enables you to take more from other countries.
RB: Very interesting, I was talking a little bit earlier with the Deputy Director General of the World Trade Organization, and he said that the new Bali Package that they established in December last year was a negotiation and was a break through, it was basically a new step forward for the WTO in terms of negotiating between India and China and also Cuba and USA, and also USA and India, so they reached to some sort of an agreement, some sort of compromise so that they can benefit economically; in this sense it resembles a lot with the design mechanism theory.
EM: It does in deed and in fact I think that the principles from the theory have now permeated people’s conciseness enough so that when these treaties are hammered out mechanism design theory plays a role.
RB: I will go now to the other side of the world: I believe you know very well what happened in Ukraine at the end of last year and the begging of this year. How do you see mechanism design theory, using mechanism design theory, in establishing a balance in the actors that are involved and are interested in what the path of Ukraine will be in the future.
EM: That’s a very difficult question, if I knew how to solve the problem of Ukraine I would be able to perform miracles so I don’t have any magic bullets for solving the Ukraine problem. All I can say is that we know from theory that the answer to conflicts is not typically the way of isolation and I would be worried if as a result of the tension in the Ukraine, if Russia for example became more isolated from the rest of the world and from Europe in particular to the extent that the countries continue to communicate with one another, continue to trade with one another, continue to cooperate with one another, that’s the way that the international tensions are resolved. Breaking of communication, breaking of trade I’m afraid that’s the risk of heightening tensions even further so I very much hope that the isolation doesn’t occur.
RB: Thank you very much. The theory is that the trade, at the trade level, in the Ukraine nothing has stopped but at the political level there are tensions. How do you see these things going hand in hand because some of them said “listen, it’s a real crisis” and at the trade level they say “we know it’s a crisis but we are still functioning”.
EM: “still functioning” for the time being. I think that unless they improve politically there is bound to be an economic cost in a longer term. Eventually, there can be lags either way. Economics lead politics or the other way around but not indefinitely, ultimately the two go together.
RB: Can we use the game theory and the Nash equilibrium with your theory, integrated? Is that possible?
EM: Well in fact, my theory, mechanism design, is part of game theory and uses game theoretic tools like Nash equilibrium as part of its analysis.
RB: And do you think they should be used integrated?
RB: How do you think we can do that?
EM: How can we apply them to…
RB: a certain event around the world, any kind of event?
RB: Use the 3 theories integrated to find a possible solution, not the solution, to an event in the world.
EM: Well, the first thing is to try to make precise what the goals of each of the parties are, but to recognize that there will always be some uncertainty about that. In games theoretic term these are games of incomplete information “I may know my goals, but I will never know your goals completely so I have to recognize that I’m operating in a situation of uncertainty. But game theory has developed tools to study interactions under uncertainty. On top of that, one way of resolving uncertainty is through a mechanism which is just an institution for international interaction. So that I think is the integration that you are calling for. Looking at the initial situation which involves a conflict of interests which is not completely understood because of the incomplete information, but layering on top of that an international mechanism, a treaty, for example or a trade agreement which brings the various parties closer together in agreement in their interests.
RB: One last question if I may? Do you see the European Union as a global actor? Like becoming the United States of Europe?
EM: I hope it will move in that direction. The European Union has successfully integrated some of its economic policy, namely the monetary side, if it can work on its other side of economic policy, namely the fiscal policy, and integrate that, I think it has a chance of having a comparable force with the USA on the global scene, but without that kind of fiscal integration I’m afraid that it will never quite have its act together.
RB: Well professor Maskin, thank you very much for taking the time to talk to us. I’m Razvan Buzatu, for Calea Europeana, from Astana.
“Journalism education: from theory to practice” – I International Summit of Journalism “G-Global: World of the XXI century”
In the course of the VII Astana Economic Forum and the II World Anti-Crisis Conference “Eurasian Economic Club of Scientists” Association and “Success K” media agencyorganized a panel session on “Journalism education: from theory to practice” as part of the I International Summit of Journalism “G-Global: World of the XXI century”.
The session discussed the issues of how to organize cooperation between journalists and experts in other fields such as IT, statistics, graphic and interactive design in education, and how to transfer this experience in journalism.
The event was attended by Co-Director of National Security Journalism Initiative & Medill School of Journalism, Northwestern University, Timothy McNulty; Director General of the Channel 7, Aziza Shuzeeva; Professor, Head of the Media Communication and history of Kazakhstan Department,Aygul Niyazgulova; Managing editor of Caspian Publishing House, Charles Van Der Liu; Director of the media school at “Kazmedia center”, Dana Rysmuhamedova; Editor-in-chief, “Finanz und Wirtschaft”, Martin Gollmer; Director of Radio “Astana”,Gulmira Karakozov. The session was moderated by the Chairman of the Board RTRC “Kazakhstan” Nurjan Mukhamedzhanova.
Most people think that it is not necessary to get a special education to become a journalist. As in case that no one will be able to do the surgery except a surgeon, no one can know better the professional tricks of historian, economist, lawyer and journalist, – shared an opinion Gulmira Karakozov, Director of Radio “Astana”, in the course of the session. Therefore, I strongly against this majority opinion. In 2005, Kazakhstan had 19 high school faculties, branches and departments that prepared professionals in journalism, and half of them belonged to the philological and historical faculties. I would like to say, the capability of journalists who were trained by linguists or historians, and taught in accordance with tutorials on journalism will not be high. This is a stumbling block in the preparation of professional journalists. Students must be taught by a person who has experience practicing in the field of journalism, – she stressed.
Recall, a purpose of the I International Summit of Journalism “G-Global: World of the XXI century” was creation of an information platform for interaction of economics, global journalism and latest technologies.
First, in Astana well-known media persons, bright bloggers, leaders and representatives of the world’s largest media holdings, website developers, website editors, newspapers and magazines editors, scientists, who demonstrate their achievements in the media, media tools and technologies, tried and tested skills in building information business and economic knowledge in the field of journalism brought together.
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