Project Components

Information about the project

Ministry of Education and Science of Republic of Kazakhstan (MOES RK) with World Bank implements a Project on Fostering Productive Innovation.

Kazakhstan is an upper middle-income resource-rich economy with significant but quite narrowly focused R&D and human capital endowments. Its main natural resource assets are in mineral (oil, gas, ferrous and non-ferrous metals) and agricultural sectors. 

Despite short-term vulnerabilities accentuated by an uncertain global and regional economic outlook, Kazakhstan's medium-term prospects are positive with strong growth on the back of the expanding oil sector and structural reforms envisioned by the comprehensive long-term “Kazakhstan-2050 Strategy” (The Strategy). 

The Strategy foresees the country’s transition to the knowledge economy within 10- 15 years and joining the top 30 most developed countries by 2050. Having implemented a number of successful strategic reforms during the last five years, the country has been focusing on diversifying away from the resource-based growth through a major industrialization and innovation support program and a number of Small and Medium Enterprise (SME) development activities. Structural reforms described in the Strategy indicate strong commitment to building a knowledge economy that would drive growth, diversification, and global competitiveness by improving the country’s key factor endowments—human capital, infrastructure, and institutions. 

The Strategy highlights seven priority areas for action by the government, including the need to improve science potential. Financing of science is set to reach three percent of GDP, with an objective to increase scientific capacity, accelerate knowledge and technology transfer through Foreign Direct Investments (FDI), and to improve efficiency of the National Innovation System (NIS)1. Productive innovation is seen as a key growth factor pervading and effectively linking all areas of economy and society. Understanding of context and use of innovation is very important because the current level of Kazakhstan’s economic development limits its ability to translate new-to-the-world technologies into economic returns and increase the country’s competitiveness in the global market. Therefore, adapting and efficiently using existing global knowledge and practice would be most cost- and time-effective at this stage, and would boost innovative capacity to the level of critical mass generating a culture of innovative competition in all sectors of the economy and society. 

Fostering Productive Innovation Project in Kazakstan

On the 2nd February of 2016 the Parliament of the Republic of Kazakhstan ratified a Loan Agreement for the Project "Fostering Productive Innovation” which was signed between the Republic of Kazakhstan and the International Bank for Reconstruction and Development.

A joint project of the Government of Kazakhstan and the World Bank aimed at strengthening the capacity of key institutions of the national innovation system, suggests the introduction of market mechanisms for the selection and support of innovative projects and technology start-ups, as well as stimulating the participation of the private sector.

Project Objectives

The Development Objective is to promote high-quality, nationally relevant research and commercialization of technologies. 

Project has 5 components:

1. Development of the Knowledge Base for Innovation.

2. Innovation Consortia.

3. Consolidation of the Technology Commercialization Cycle.

4. Strengthening Coordination of the National Innovation System; Enhancing the Capacity of the Existing Institutional Structures.

5. Support Project Implementation. 

In this project 3 grant programs will be carried out to fund research group projects focused on high-quality research with commercial potential which will support PhD students. In addition, the planned creation of consortia by bringing together science, industry and government to ensure the needs of the market and the manufacturing sector on the basis of higher education institutions involved in the implementation of the GP IIDK, and JSC "Nazarbayev University".

To demonstrate the effectiveness of earlier investments, in technology start-up companies will be formed venture fund through the mechanism of public-private partnership, a brokerage office to generate deal flow and refining technologies and innovative ideas into commercial investment projects. It is expected the establishment of the office of technology transfer abroad for promotion of Kazakhstani technologies and research, and the introduction of new technologies in Kazakhstan.

Duration of the project "Promoting productive innovation" - 5 years, from 2016 to 2020.

 

The component aims at promoting high-quality, nationally relevant research and development and advanced human capital activities for innovational consortia, technological start-ups and new companies established through spin-off for the development of perspective sectors. 

Subcomponents: 

Grants for Research Groups

Based on the TCP, the sub-component will finance two types of grant instruments for eligible R&D ideas: grants for young researchers and internationally recognized researchers (a continuation of the SSG, Program) and possess such innovations as the increased emphasis on the commercialization of science and co-financing from the private sector.

Grants for PhD research and training 

This sub-component will focus on strengthening the scientific potential of Kazakhstan through the provision of grants for scientific training and research for the candidates for the degree of PhD, postdoctoral students and researchers in leading foreign universities and recognized research centers in technical areas with the possibility of introduction of scientific achievements into production.

In this component the introduction of a new instrument - technology consortia is proposed. Grants will be awarded to consortia, aimed at addressing the problems and challenges, which are strategic for the future of Kazakhstan (energy, minerals, metals and agriculture).

The component includes two windows of Calls for Proposals: 

Productive sector consortia  (PSC): consortia in the productive sectors of the economy as agriculture, extractive industries, manufacturing and etc.; 

Inclusive innovation consortia (IIC): long-term cooperation in order to improve the provision of social services (health, education, water, urban and rural infrastructure and others) to increase the income of urban and rural population.

The objective is to complement the existing financial instruments and solutions suitable to different stages of start-up company development. The four sub-components envisage promoting the development of start-up companies through: 

Establishing of the Early Stage Venture Capital Fund (“ESVC Fund”) for purposes of providing ESVC Investments and finance ESVC Subprojects, including provision of management support;

Provision of consultant’s services to develop technology and innovation ideas into viable commercial projects, through innovation brokerage and deal flow generation activities, pursuant to criteria set forth in the Project Operations Manual (hereinafter “POM”);

Establishment and operation of Technology Acceleration Offices outside of Kazakhstan; and

Establishing the capacity of existing Technology Transfer Offices at major Kazakh universities and enhancing their capacity through the provision of Training.

The purpose is to consolidate, coordinate, and achieving synergies between existing innovative enterprises and public authorities to refocus the research sector of the country in the production of goods and services demanded by the market.

In this component institutional structures’ functions / features will be supported and for this purpose consultants’ services on the development of the Innovation Observatory will be financed as well as the operational costs and employee training.  The component will finance: 

Innovation Observatory - a permanent framework to monitor innovation performance both in productive and public sector and 

Awareness raising and coordination activities to articulate and disseminate an inclusive innovation agenda for Kazakhstan. 

This component will contribute to the achievement of high level projects’ goals, namely, to the cultural change of NIS, development of NIS in accordance with international standards and optimisation of its functioning. At the global level, the implementation of this component will entail the improvement of Kazakhstan's position in the Global Competitiveness Index of the 12th Division: Innovation.

The Component will support the Project Implementation Unit in carrying out the project management, monitoring and evaluation, awareness raising activities, and capacity development.