© Fraunhofer MOEZ Integration Processes of National Innovation Systems as a Response to Global Challenges, 3 May 2011, Astana Eurasian Regional Integration – Implications for Innovation and Entrepreneurship Policies Mathias Rauch, Deputy Director

© Fraunhofer MOEZ Contents 1.Regional Integration in Eurasia – Short Appraisal 2.Spotlight: Locational Competition, FDI and Local Entrepreneurship 3.Implications for Innovation and Entrepreneurship Policies in Kazakhstan

© Fraunhofer MOEZ Regional Integration in Eurasia – Short Appraisal  Regional (re-)integration in the post-Soviet countries has been put on the political agenda; at different paces and levels, though:  EurAsEC plays a major role for economic integration; the level of integration within EurAsEC-3 is higher than within the CIS  General level of integration is rather low, particularly instiutionally; key sectors such as energy, extracting and transport show higher integration  However, these sectors are less likely to show high degrees of SME entrepreneurship and innovation activities  Creation of Customs Union in EurAsEC-3 is a significant step toward deeper economic integration (common market?)  Which opportunities for developing an innovative entrepreneurial base may arise from these integration efforts?

© Fraunhofer MOEZ Regional Integration in Eurasia – Expected Economic Effects Greater economic convergence (long-term perspective) Higher intraregional flow of goods and capital Increase of trade volumes Increase of foreign investment volumes including FDI Higher integration of markets Enlarged markets are likely to increase competition Enlarged markets can offer new opportunities for entrepreneurs

© Fraunhofer MOEZ Contents 1.Regional Integration in Eurasia – Short Appraisal 2.Spotlight: Locational Competition, FDI and Local Entrepreneurship 3.Implications for Innovation and Entrepreneurship Policies in Kazakhstan

© Fraunhofer MOEZ The Increasing Role of FDI within EurAsEC-5 Developments in intra-regional FDI in EurAsEC-5 Source: EurAsEC (2009).

© Fraunhofer MOEZ FDI and Local Entrepreneurship – Achievable Impacts  Increased locational competition for FDI from Non-EurAsEC countries  FDI often cannot be reduced to a flow of capital but also implies the transfer of technology and knowledge (however difficult to verify):  Organisational and management knowledge used by foreign or multinational companies (MNCs)  Technological capabilities and know-how  Knowledge transfer in form of:  Contribution to professional education and economic development in host country  Knowledge spillovers to stakeholders such as local entrepreneurs/SMEs Policy-makers need to provide an appropriate framework, in order to achieve these impacts. This applies particularlyto transition economies.

© Fraunhofer MOEZ Contents 1.Regional Integration in Eurasia – Short Appraisal 2.Spotlight: Locational Competition, FDI and Local Entrepreneurship 3.Implications for Innovation and Entrepreneurship Policies in Kazakhstan

© Fraunhofer MOEZ Implications for Innovation and Entrepreneurship Policies in Kazakhstan (I)  Regional integration does not automatically imply an enhancement of sustainable entrepreneurial dynamics in the region  Framework conditions need to be developed and implemented in order to increase the rate of technology absorption:  Investment into human development and R&D infrastructure  Access to financial resources for innovation (e.g. SME and start-ups)  Creation and enforcement of sufficient legal framework (e.g. IPR) Regional integration process needs to be accompanied by national and transnational policies that aim at improving framework conditions for innovative entrepreneurship

© Fraunhofer MOEZ Implications for Innovation and Entrepreneurship Policies in Kazakhstan (II)  Baseline of a holistic policy approach: Coherent domestic policy strategy to create favourable framework conditions at national and subnational levels (Business Roadmap 2020) (Trans-)national coordination of innovation-related policies between national and regional authorities Targeted policy measures to attract sector-specific and sustainable FDI

© Fraunhofer MOEZ Mathias Rauch Deputy Director Fraunhofer MOEZ Neumarkt Leipzig Telefon Fax Thank you for your attention!