WTO and technological development of transition economies: the 'crucial case' of Kazakhstan
After the dissolution of the Soviet Union, former communist republics started the process of integration into the global economy by joining the World Trade Organisation (WTO). To become members, transition economies were forced to adopt a broad array of commitments which went well beyond the boundaries of the formal WTO agreements, including the need to deregulate foreign direct investments (FDI) and to transform the former closed, centrally planned economies into open market economies. Although the WTO had little knowledge of the nature of such a transition, and could not predict the results of the reforms, it presented these demands as an opportunity to turn these countries into knowledge-based economies. For the governments of transition economies this provided an imagined future and they started to implement reforms advocated by the WTO based on this sociotechnical imaginary. This research seeks to understand whether implementation of radical reforms by the governments of transition economies to pursue an imaginary, formed by the neoliberal rhetoric of the WTO, was an adequate course of action. This is a qualitative single case study research project, which uses a crucial-case research design to verify that the hypothesis holds across a cluster of cases to which it is applied. There are three major aims of this thesis: the first is to explore the impact of accession to the WTO in the context of its demands to transform former closed, centrally planned economies into open market economies. This perspective has been largely ignored by innovation policy literature to date. I argue that such a task represented a paradigm-shifting undertaking, the main challenge of which lay not in changing formal structures, but in making them fit with the long-established informal, tacit elements of the system, such as codes of conduct, practices, norms, routines, and values. The second aim is to carry out an empirically detailed and contextually attuned examination of the feasibility and effectiveness of governmental policies, based on the imaginary of transforming former centrally-planned republics into knowledge-based economies through establishment of open market relationships and attraction of FDI. Finally, it has been my intention to conduct rigorous, in-depth research which explores the process of international technology transfer through FDI as a method of catching-up by economies in transition. This thesis contributes to the field in three main ways. Firstly, the analysis provides a critical appraisal of WTO policies applied to former centrally planned economies. The research shows that changing the mindsets of domestic actors was paramount in transitioning because their values, codes of conduct, norms, practices, and routines were formed over the course of decades of socialist rule which proved to be incompatible with the ways things are done under open-market relationships. Secondly, this research empirically refutes neoliberal claims by the WTO that the entry of multinationals into a host country’s market automatically leads to occurrence of spillover effects. I argue that successful integration into supply chains of multinationals requires developing entrepreneurial spirit and incentivising capability building of domestic firms. The inability of domestic firms to supply high-quality intermediate inputs prevents the relocation of value-added, knowledge-intensive stages of production processes of multinationals into the host country, limiting their activity to last-stage assembly and the exploitation of the country’s natural resources with no evidence of positive externalities to local firms. Thirdly, this thesis contributes to our understanding of the relationships between policymaking and innovation by shifting attention from scientific actors and institutions towards the specificities of the pathways of technological development, shaped by how the authorities envision the country's future. I show that by following the recommendation of the WTO as a guideline for technological development, transition economies overlook real problems while focusing on imaginary goals.