SUSTAINABLE DEVELOPMENT: NATIONAL MANUFACTURING STRATEGY – HUMAN CAPITAL ACCUMULATION AND CONTIRBUTION CHANCES FOR THE NGOS

SUSTAINABLE DEVELOPMENT: NATIONAL MANUFACTURING STRATEGY – HUMAN CAPITAL ACCUMULATION AND CONTIRBUTION CHANCES FOR

THE NGOS

Dr. Sarvar Gurbanov

28 December 2013 1

Special Adviser to the United Nations Secretary-General on the Millennium Development Goals.

• World's governments have agreed to place Sustainable Development at the very center of the world's post-2015 development agenda.

• Just as the Millennium Development Goals, adopted in 2000, have proved highly effective in the fight against poverty and disease, the SDGs (which will succeed the MDGs in two years) promise to address the global challenges that we face in areas including energy, food, water, climate, and jobs.

• Jeffrey D. Sachs, Professor of Sustainable Development

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Global Manufacturing • “Global manufacturing production is shifting gradually

from developed countries to developing countries, as firms move to benefit from cheaper labor, quality infrastructure, lower social costs and large markets in countries like China and India.

• World manufacturing value added (MVA) peaked at $7,390 billion in 2010 (18,2 percent of global GDP). The manufacturing sector in developing countries has been buoyant, with a remarkable 5.6 percent annual growth rate in MVA over 1990 – 2010, slightly higher than the 4.8 percent GDP growth rate.

• Also, global manufacturing employment has been shifting from developed to developing countries. This trend is expected to intensify as more manufacturing relocates to developing countries” (UNIDO, 2011)

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Manufacturing exports

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Manufacturing technology

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Declining manufacturing employment

In Japan, between 1991 – 2004, 3 million jobs

In USA, late 1990s till today, 5,5 million jobs In Nigeria, 1983 – 2010, 5,2 million jobs In Cameroon, fiscal policy, improve

productivity in manufacturing, reducing poverty rate

(In Nigeria, Only 5 percent of manufacturers think that foreign competitors hinder their success, 72 percent of population is poor by 2011).

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Importance of Manufacturing

provides above-average-paying jobs,

is the source of good jobs for non-college-educated workers

for generations, manufacturing has built up America`s middle class,

provides jobs which are more likely to be full-time jobs, and have good benefits for workers

Multiplier effect on job creation

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Chinese Success

• For 25 years, China gradually built its manufacturing base and completed its global integration.

• “In 1986, four Chinese scientists recommended to the government that IT be designated a strategic sector. The request was approved and in 1988 China`s National Development and Reform Commission designated high tech as a “pillar” industry worthy of strategic industrial policy”

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Implications for Azerbaijan

• A success on reducing poverty, next step to built up a strong middle class,

• National Manufacturing Strategy

• Determining manufacturing as the number one priority for Azerbaijan economy will generate three fruitful outcomes at the same time:

• building a strong middle class,

• fostering development in non-oil sectors

• and diversifying exports away from the oil sector.

28 December 2013 10

Crucial Document: "Azerbaijan 2020: Look into the Future" Concept of Development

• Azerbaijan plans to increase the share of tourism sector in GDP.

• In order to sustainable economic development, for Azerbaijan,

• knowledge-based economy,

• science intensive technology and products and

• expansion of innovative activities are also at the main aims of development concept.

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"Azerbaijan 2020" Concept of Development

• State Fund for the development of information technologies will be set up; to foster innovative entrepreneurship.

• Export-oriented ICT is priority of Azerbaijan development policy and Azerbaijan is pretty interested in developing

• the space industry.

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Azerbaijan 2020 Development Concept

• states that, there will be subsequent study abroad program by 2015.

• I suggest that to determine science and technology related areas for the prospective Azerbaijani students such as: civil, computer, industrial, chemical, military defense, aerospace engineering, pharmaceutical, nanotechnology, medical and so on.

28 December 2013 13

The Decree of the President of the Republic of Azerbaijan

• which was announced with the

• "National Strategy of Development of Education in Azerbaijan in 2011 - 2021" title, lay out a working group with already determined priorities such as establishment of

• information society and knowledge based economy

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Education Model for these Goals

• I calculate the average tuition and fees for the top 10 American Universities. This figure is 43042 US dollars.

• Starting from 2015, every year Azerbaijan can send 3 thousand students abroad for

• acquiring and transferring modern education and science.

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For the additional expenses part,

• I include 1200 US dollars scholarship per student capita for ten months,

• 2000 dollars a yearly round plane ticket,

• 500 USD dollars for additional expenses such as books and other course materials.

• Total additional expenses will be 19 thousand US dollars then. (+ 43042 US dollars tuition and fees) = 62 thousand dollars

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Forecast

• If 4 out of 100 students decides to pursue Ph.D. degree in science and technology fields

• then it will let Azerbaijan

• to establish its own science and technology university or research center for the domestic market with 1200 scholars.

• Sustainability matters

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Forecast

• Considering 2011 numbers, just only 3000 workers are employed on the petroleum refineries, which Azerbaijan does have comparative advantage may earn Azerbaijan 31 billion dollars.

• This return is three-fold return of total cost of the 30 thousand students abroad. Productivity of a US worker in selected sectors are employed as benchmark figures for the prospects of educated labor force in Azerbaijan economy.

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On the other hand • Based on official data, number of prospective

students whose central university entrance exam grade is lower than 200 equals to 569 thousand individuals. Considering the labor-intensive nature of tourism industry,

• Development concept about the Vocational Education in Azerbaijan which covers 2007 - 2012 period, includes this fact that, in developed countries % 40 - 50 of all students are allocated on these professional schools, but this figure in Azerbaijan is around 5 - 8 percent

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Evidence Based Approach for Study Abroad

• Azerbaijan 2020 - Development Concept: in this critical development document, it is stated that, Azerbaijan plans to reach the goal of 1000 USD per capita non-oil export. By the end of 2012, Azerbaijan total non-oil exports equal to 1,9 billion dollars (CBAR, 5/2013)

• With the current 9,3 million citizens, per-capita non-oil export is about 208 USD per capita. (five fold increase )

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The EBRD - World Bank Business Environment and Enterprise Performance Survey (BEEPS)

• which covers 287 firms in 2005 and

• 355 firms in 2008 reveal some helpful hints. BEEPS report offers relative rank of problems, in 2005 skills and education of workers rank is 13, and same kind of ranking is 6 in 2008.

• The most severe problem ranks number 1, the least 14

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Share of Non-Science, 58 percent

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Scientific Justification 1

• "High level of human capital can offset negative effect of natural resource on economic growth. It implies that, human capital serves as a transmission mechanism of resource curse" (Behbudi et al, 2010: 98 - 99).

• Human capital accumulation makes Norway, United Kingdom and Malaysia to perform better than Iran, Algeria and Syria

• in terms of economic growth.

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Scientific Justification 2 • Other study suggests that, economic reforms

and human capital accumulation are crucial components of long-run economic growth in India and South Korea.

• Moreover, positive effects of economic reforms in India tend to be smaller than Korea. Striking fact is that, one of main hurdles is stated as human capital accumulation (Maksymenko and Rabbani, 2011: 56).

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A Decree approved by the Azerbaijan President Mr. İlham Aliyev regulate

• "Long Term Strategy on the Management of Oil and Gas Revenues"

• On this document, one of the major objectives is stated as follows:

• development of "human capital" (training (including in foreign countries) highly qualified specialists and improving professional capacity of employees).

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Advantage 1

• oil boom started in 2004 in Azerbaijan. To adopt a national manufacturing policy and implement it can make Azerbaijan to have its own settled non-oil industry

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Advantage 2

• with the collapse of Soviet Union, Azerbaijan lost vast amount of manufacturing base. It is advantage, because Soviet technology was pretty outdated and

• it was not sustainable enough to keep up with independent Azerbaijan.

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Advantage 3

• As central admission exams records show, there is suffice amount of youth population with the

• desire of education and employment

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Advantage 4

• Azerbaijan policymakers have vision.

• Azerbaijan President, Mr. İlham Aliyev stated a wise byword:

• "I will convert the black gold into the human capital" (MINCOM, 2012).

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Possible Contributions of the NGOs • Increasing awareness among high school

graduates for choosing science and engineering majors, instead of social sciences.

• Contributing to the tourism sector, by educating the youth

• Study abroad programs (post – 2015): main focus on the science and technology fields

• Persuading Private Sector on educating next generation with the science majors.

• Preparing policy papers about the low graded high school students (below 200 points)

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World Economic Forum – Global Competitiveness Index 2013 – 2014

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International Labor Organization – Youth Employment Forum Best Practice

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Thanks…

Thanks for your Attention...

Dr. Sarvar Gurbanov

[email protected]

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