The Economic Analysis and Prerequisites for Creation of a Cotton and Textile Cluster in the Republic of Kazakhstan

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1 Indian Journal of Science and Technology, Vol 9(5), DOI: /ijst/2016/v9i5/87589, February 2016 ISSN (Print) : ISSN (Online) : The Economic Analysis and Prerequisites for Creation of a Cotton and Textile Cluster in the Republic of Kazakhstan Aina Aidarova *, Мakhalbay Uskenov, Aimzhan Zhakeshova, Elmira Dosmuratova and Darikul Kulanova M. Auezov South - Kazakhstan State University, Shymkent City, Kazakhstan; ab_moon@mail.ru, Makhalbay@mail.ru, zhakesh_a@mail.ru, 639kz@mail.ru, k_dana_a@mail.ru Abstract Background/Objectives: The aim of this study is to choose the methods of economic analysis and develop economic and mathematic models for forecasting and economic growth to enhance the competitiveness of individual companies and the country's cotton-textile cluster. Methods: We used a variety of methods and techniques of economic analysis, including abstract thinking, economics and statistics, calculation and design, correlation regression analysis and trend model. Development of a mathematic model of the trend allows solving the problem-providing analysis of forecasting the dynamics of performance indicators. Findings: The factorial analysis findings indicate very high strength of result variation casualty by a variation of factors. According to the analysis, the performance of the industry can be monitored, and timely measures can be taken to eliminate shortcomings in the industrial and economic activities of the industry. The use of cluster model for the textile industry development in Kazakhstan is an important factor to increase the competitiveness of individual companies and the entire cotton-textile industry. Cluster approach allows mobilizing all economic factors in a certain direction. The main prerequisite for the creation of cotton-textile cluster is to restore an intermediate link in the chain of values added of cotton and textile sector for the dynamic development of yarn and fabrics production which today possesses the greatest competitive potential in the country. Further development of the agrarian and industrial complex of Kazakhstan should be guided by increase of competitiveness of agricultural products due to increase of efficiency of the state support and creation of equal favorable conditions for agribusiness development. Applications/Improvements: The obtained results can be used for further research on this issue and for increasing the competitiveness of the cotton and cotton-textile cluster enterprises in the country. Keywords: Competitiveness, Cotton, Cotton-Textile Cluster, Correlation and Regression Analysis, Factorial Analysis, The Republic of Kazakhstan 1. Introduction Now research of a cotton breeding has special relevance and the importance. Decrease in raw cotton production of in the previous s led to the problem of need to preserve and provide textile branches of the country with raw materials. The branch is characterized by low yield of raw cotton, high labor input, and also big expenses for means of production, fuel and energy, low purchase prices compared to the costs. Existence of inflation leads to continuous growth of product cost, decrease in production efficiency. The cotton-textile cluster development has been adversely effected by such factors as destruction of former system of material and technical support, disparity of the prices for agricultural and industrial products, impossibility of updating the means of production, owing to financial deficiency, outdated funds and resource-intensive technologies, etc. In this regard it is of particular importance to study the * Author for correspondence

2 The Economic Analysis and Prerequisites for Creation of a Cotton and Textile Cluster in the Republic of Kazakhstan questions of production engineering for the purpose of increasing its competitiveness 1, creating the most rational structure of management, creating a business plan for the enterprise development and designing an innovative project of the cotton and textile cluster development. Only the integrated approach to the production engineering and product sales will help producers to provide competitive advantages. Complex research of the mechanism for increasing competitiveness of the cotton and textile cluster in Kazakhstan demands development of the evidence-based concept of its formation and development, an assessment and forecasting 2. The importance of the problem, and also insufficiency of its scientific study determine the need to continue researches in this direction. 2. Materials and Methods The method of analysis and synthesis, as well as abstract and logic methods, and the principles of inductive, deductive approach and the system analysis were used in the work. The comparative analysis method, economicand-statistical and computentional constructive techniques, the correlation and regression analysis and trend models for economic processes forecasting were used as the methods of the economic analysis with modern information technologies applied. Development of mathematical trend model allows solving problems to carry out the analysis and forecasting of a productive indicator dynamics on its basis. The forecast is based on the assumption that ranks will grow as well as the basic period. Such trend model is shown in Figure 1. Comparison and analysis of values of R 2 determination according to the different trend equations s revealed that for calculation of the expected values of raw cotton production in RK for the future it is necessary to use the equations y = x x , where R 2 = Figure 1. Raw cotton output versus cotton productivity. And expected values of the area under cotton cultivation in the specialized cotton-growing formations for the future are expressed by the trend equation with value of determination R 2 = Results and Discussion The cotton breeding is one of the most dynamically developing sectors of economy of the Republic of Kazakhstan (RK), and cotton-fiber production is one of quickly developing business lines in the textile industry. To solve the questions of rational placement and specialization of agricultural branches is of primary importance for Kazakhstan with its extensive territory and various opportunities of raw cotton production and sale. According to the data of 2014, % of raw cotton was produced in peasant (farmer) households, remaining 4.6% at the agricultural enterprises. Creation of competitive cotton-growing formations imposes special requirements for justification of their parameters in the production directions and the accounting of the developed specialization of production in the regions 4. (See Table 1). Currently, the average level of raw cotton yield from 1 hectare made 25.1 centner/hectare in the country in 2014, Table 1. Raw cotton production in the Republic of Kazakhstan (breakdown by farms), thousand tons Forms of farms in % to 2010 Agricultural enterprises Peasant (farmer) households Farms of the population All categories of farms Vol 9 (5) February Indian Journal of Science and Technology

3 Aina Aidarova, Мakhalbay Uskenov, Aimzhan Zhakeshova, Elmira Dosmuratova and Darikul Kulanova Table 2. Dynamics of the main indicators of cotton production in RK Years Total cotton sown area, Gross collection of raw cotton - thous. ha in % to the thous. in % to the previous tons previous Raw cotton yield centner/ha in % to the previous Cotton-fiber volume thous. tons in % to the previous in average on average on average at the same time in the peasant (farmer) households the average level of raw cotton yield reached 29.3 centner/ hectare over the last three s 5. The data given in the Table 2 show that the greatest output of raw cotton was obtained in 2005 and made thousand tons. Average annual increase in raw cotton production of made 16.2 thousand tons during During economic analysis the methods and techniques of diagnostics are based on the factorial analysis. The task of the deterministic factorial analysis consists in definition or quantitative assessment of influence of each factor on a productive indicator 6. To solve this factorial analysis task the following factors were selected which influence the forecasting object: y - Total raw cotton production in the country, thousand tons. x 1 - The cotton sown area in the country, thousand hectares. x 2 - Level of cotton productivity, centner/hectare. x 3 - Consumption of mineral fertilizers per 1 hectare, kg application rate. x 4 - Average selling price of 1 ton of raw cotton, thousand tenge. Following the results of the computerized solution of the task calculations, the multiple regression equation is as follows: y = - 307,2 + 2,0015 x ,1035 x 2 + 0,3141 x 3 0,2833 x 4 The results are presented in Figure 2. Figure 2. Raw cotton output versus cotton productivity. Value of the coefficient of multiple determination is R 2 = 0,9947 and it estimates the result variations by means of the factors presented in the equation in the general variation of result 7. This share makes % and indicates very high strength of result variation casualty by a variation of factors, in other words a very close connection of factors with the result. Despite increase in production and enhancement of own financial stability many cotton-growing enterprises have numerous unresolved problems, such as lack of own seed material, weak fertilizer support base and their high cost, etc 8. Vol 9 (5) February Indian Journal of Science and Technology 3

4 The Economic Analysis and Prerequisites for Creation of a Cotton and Textile Cluster in the Republic of Kazakhstan Cluster approach allows mobilizing all economic factors in a certain direction. As of today development of clusters is a widely recognized tool accompanying economic development and increased competitiveness. Quickly extending number of cluster initiatives, both in the developed, and in the developing countries worldwide, reflects their efficiency and viability. Application of cluster model in the development of the textile industry of Kazakhstan is an important factor of competitiveness of the separate companies and the entire economy. Currently, the world textile market is characterized by the fact that production of textiles moves from the European countries to the Asian ones which possess cheap labor and where potential sales markets are located. Kazakhstan has all opportunities to create a powerful textile industry if not of the world value, but surely of the regional importance. JSC Center of Market and Analytical Research 9 together with the American consulting company J.E. Austin involved by the Government of Kazakhstan to selection of competitive branches of economy and merger of the enterprises operating in these sectors into clusters after studying and the analysis of the existing regional prerequisites, offered a project for creation of a cotton and textile cluster in the Southern Kazakhstan Region. The main objective of the cotton and textile cluster creation is restoration of an intermediate link in the chain of values added of cotton and textile industry for dynamic development of yarn and fabrics production which possesses the greatest competitive potential today. Cotton is a source of raw materials of the cotton and textile industry of Kazakhstan. The cotton obtained in Kazakhstan refers to middle fiber species of cotton-fiber. The basic volume of the cotton-fiber produced - more than 80% - is focused on export. The rest is used by such textile enterprises as Alliance Kazakh Russian Textile LLP, JSC Melanzh, JSC Utex, Nimex Textile LLP. In the developed countries, such as Germany, France and the USA, a share of textile and light industry in the industrial output is equal to 4%, in Italy to 12%. This allows them to create 20% of the budget and to provide filling of the domestic market for 75-85% with own products. In Turkey and China the textiles share in GDP reaches 30%. Textile and clothing industry of Kazakhstan covers only 10% of requirement of the domestic market, whereas for formation of the country s economic security the volume of internal production shall satisfy at least 30% of the domestic demand 5. The Kazakhstan textile industry has a high potential for successful development of the branch, considering lower cost indicators during production, proximity to raw materials and potential sales markets of the products produces, attractive investment climate, and the developed transport infrastructure. Kazakhstan possesses a good scale of market opportunities, both for the textile industry development, and for the separately taken sector of the cotton and textile industry of the region 10. Nowadays considerable tax and customs preferences are granted to the textile companies. Within the territory of Special Economic Zone (SEZ) Ontustik it is planned to construct about 15 textile enterprises which will process 100 thousand tons of cotton-fiber a. The main types of products in SEZ will be denim, terry, knitwear fabrics, work wear and crude fabrics, home textiles. 4. Conclusions and Offers Such factors promoted successful development of SEZ as preferential economic terms, access to the raw materials source, sales markets, human resources, infrastructure, low level of expenses, and stable investment climate. Implementation of the idea of Ontustik assumes increase in the share of textile industry in the country s of Gross Domestic Product, creation of the hi-tech productions providing competitiveness of the domestic products in terms of price and quality, creation of conditions for attraction of investments into branch and crediting of the enterprises by the second level banks, increase of competitiveness of the national economy, which will promote its integration into the world economy. Best practices in the experience of agriculture support by various countries of the world demonstrated that the majority of the countries use subsidizing as the key instrument of agricultural production support. The analysis of the current trends in the development of the leading agrarian countries showed that further development of the agrarian and industrial complex of Kazakhstan should be guided by increase of competitiveness of agricultural products due to increase of efficiency of the state support and creation of equal favorable conditions for agribusiness development. 5. References 1. Porter M. Competitive strategy: Technique of the analysis of branches and Competitors/Michael Porter: Transl from English. 3rd ed. Moscow: Alpines Business of Axle Box; Lyubushin NP. Economic analysis. Moscow: UNITY-DA- NA; Vol 9 (5) February Indian Journal of Science and Technology

5 Aina Aidarova, Мakhalbay Uskenov, Aimzhan Zhakeshova, Elmira Dosmuratova and Darikul Kulanova 3. Gataulin AM, Gavrilov GV, Uskenov MK, et al. Economic-mathematical methods in planning of agricultural production. Manual for higher educational institutions. Tashkent, Uzbekistan: Mekhnat; Serova EV. Agrarian economy. Textbook. Moscow: GU HSE; Smaylov AA. Kazakhstan today, editor. Astana; Yeliseyeva II. Econometrics, editor. The textbook Moscow: Finance and statistics; Uskenov MK. Specialization and cooperation of agricultural production: Monograph. Shymkent: Nurli beine Publishing House; Dybal SV. Financial analysis: Theory and practice. Manual. St Petersburg: Business-Press Publishing House; JSC Center of Market and Analytical Researches. Astana, Kazakhstan; The program for development of agro-industrial complex in the Republic of Kazakhstan for Agrobusiness Astana; Vol 9 (5) February Indian Journal of Science and Technology 5

AGRICULTURE IN KAZAKHSTAN: CURRENT SITUATION, PROBLEMS AND POSSIBLE SOLUTIONS Ainur Yesbolova

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