Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Concept of Human Capital in the Formation of Innovative Aspects of Human Capacity R. Baizholova*, A. Ramashova** and B. Omirbayeva*** The concept of human capital makes it possible to look at the problem of the relationship of production and labor in terms of human capacity as a resource, giving additional impetus to the growth of labor productivity in the innovation economy. At the same time, the study of the world experience of innovative development allows us to conclude that a rational use of human resources and innovative development of human resources is rigidly connected with the need to develop new approaches to human resources management and staff of enterprises, development of new technologies and methods to improve them. Field of Research: Economics 1. Introduction Research approaches to the definition of human capital in the history of economic thought held by many scientists. The scientific interpretation of the category of "human capital" was formed gradually and the first stage of the assessment was limited to a certain level of knowledge and abilities to work. In general, the development of human capital theory is based on the achievements of the institution, the neoclassical theory and neo-Keynesianism. It’s widespread due to the need to deepen understanding of the role of man and the accumulated results of his intellectual activity on the pace and quality of development of society and economy. 2. Literature review Scientists and economists, beginning with classical political economy, especially dealing with the definition of the category of "labor", which is the main driving factor of production, and social reproduction in a broad, national economic aspect, has renewed production of goods and the reproduction of the labor force. Adam Smith wrote that "the increase in labor productivity efficiency depends primarily on increasing agility and skill of the worker, and then by improving the machines and tools with which he worked" (Smith 1993). Karl Marx saw the development of qualitative aspects of vocational activity of man as a second form of social production. In this process, the labor force is not only playing, but also improving, evolving (Marx 1983). However, the expanded social reproduction can be carried out only if there is a surplus product. This is a common position for all (Petrenko and Edush 2012). * Dr. Raissa Aliyevna Baizholova, Faculty of Economics, L.N. Gumilyev Eurasian National University, Astana, Kazakhstan. E-mail: baizholova_ra@enu.kz ** Aissulu Nurmambekovna Ramashova, post graduate student of Economics Faculty of L.N. Gumilyev Eurasian National University, Astana, Kazakhstan. E-mail: rgul.ksu@mail.ru *** Bibigul Serikovna Omirbayeva, post graduate student of Economics Faculty of L.N. Gumilyev Eurasian National University, Astana, Kazakhstan. E-mail: bibigul88@mail.ru Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 The surplus product created by labor, then it is a source of reproduction. The latter occurs due to population growth, and through the development of abilities to work of individuals, the accumulation of knowledge, experience and skill that requires a considerable amount of labor and materials. This particular kind of accumulation, embodied in the person of work, according to T. Petrenko and A. Edush, there is still relatively little studied. When replacing the classical labor theory of value to the postulation of the priority of labor as the main productive factor comes neoclassical paradigm, the analysis of human capital is reduced to its social component, that is, the cost factor of development. It was believed that investment in education, training is unproductive, costly and, until recently, a significant portion of economists underestimated the impact of educational services for the development of abilities to work. According to the same representatives of the neo-Keynesian ideas of the direction of economic science, the priority factor in the growth rate of the economy in favor of accumulation, the formation of demand, especially demand for investment in the environment where the main technological factors do not change due to the inflexibility of prices and are determined by the nature of neutral technical progress. Formed in the mid XX century the concept of economic growth of Robert Solow has led to the replacement of the Keynesian model of Harrod-Domar neoclassical theory of growth, in which postulated that instability of economic development is a consequence of interchangeable resources. If the neo-Keynesian model of technological progress was neutral and was parallel to the increase in capital-labor ratio at constant capital intensity of production, the concept of Solow it is presented as an exogenous factor, a collective argument of the production function that combines all the others, in addition to the labor and capital factors of production, which was a breakthrough in the understanding of the role of technology and the improvement in the period of scientific and technological revolution. In the 50-ies of XX century work force are the leading factors of economic growth. Structural changes in the labor force and economic dynamics have resulted in the emergence and development of human capital theory (Kazaryan 2014). According to M. Kazaryan, Western economists, spending considerable efforts on the development of the theory of labor and sophisticated techniques of statistical analysis of income inequality and the factors causing them, failed to complete the creation of a coherent, and to confirm the theory. There were many interpretations of "human capital". The most common interpretation of the human capital of the said expert presented and structured in Table 1. The value of the human capital aspect (or resource), which expresses the quantitative relations concerning its use, is the most common in the economic literature. Its meaning lies in the fact that it speaks of equity as capitalization of the potential of the business. Poleznostny aspect of human capital expresses its qualitative characteristics and has not yet gained sufficient number of supporters. It is this aspect, according to M. Kazaryan, and represents a further object of careful study and analysis (Kazaryan 2014). Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Table 1 - interpretation of the essence of human capital Interpretations Value aspect Initial Advanced Useful aspect Modern Essence of interpretation The aggregate investment in people, enhances its ability to work - education and skills Consumer spending - the cost of family on food, clothing, housing, education, health, culture, and government spending for these purposes The body of knowledge and skills that are used to meet the diverse needs of individuals and society as a whole Source: (Kazaryan 2014, P. 10) In general, over the years of study of this phenomenon as human capital it was formulated many conceptual views, however, according to, for example, E. Dubik, a variety of definitions does not provide a common understanding of human capital, and their synthesis can be reduced to the following characteristics: - A set of skills, skills and abilities that promote productivity growth and thus generate income for individuals, families, businesses and society. Physical and mental abilities a person possesses, they are inseparable from it, and are used in a particular field of social reproduction; - Acquired (advanced) capabilities, which are obtained through formal training or education, training or experience; - Investment in people, which provide accumulation of certain abilities and qualities. Quality is generally considered: health, mind, energy, education, professionalism and mobility; - Social, biological, psychological, economic, ideological and cultural abilities of the person (Dubik 2013). You must agree with M. German and H. Pomuleva that the core of human capital, of course, was and remains a man, but now - an educated, creative and enterprising, has a high level of professionalism. Therefore, the division of labor for unskilled labor and work, requiring education, special skills and knowledge, gradually loses its original meaning and the economic content of the determination of human capital, which the founders of the theory of human capital was identified with educated people and their accumulated knowledge and experience. This economic category is constantly expanding with the development of the global information society and knowledge economy. Understanding and selection of human capital as the main factor dictate the development of an integrated approach in the development of a concept or strategy and linking them with all other private policies and programs. It should first of the essence of human capital as the main factor of innovative development (German and Pomuleva 2012). However, it is important from the point of view loaned the subject of our study namely, human resources. On the basis of the formation of human capital, which lays the foundation for the expansion of the possibilities of using labor potential of society and human capital, according to T. Petrenko and A. Edush formed human potential, which determines the operation of individual businesses and their competitiveness in the market and at the same time independent on the capabilities that enterprises provide their employees. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Issues related to the development of human capacity are a priority for all social and economic development of the country, as it is assumed, along with the assessment of the activity of enterprises, employers, research the necessary social, allowing to carry out training, the professional infrastructure orientation, social adaptation of personnel, forecasting of changes demand for various professional and qualification groups of workers, etc. In the context of the effective dynamic economic system to identify the possibility of formation of human resources and provide recommendations for their implementation can only be regular monitoring of the situation in the development of human resources, as well as prospects for their innovative component of economic growth (Petrenko and Edush 2012). B. Milner takes the concept of "human capital" in the direction of "intellectual capital", which from our point of view is closer to the innovative role of labor. A distinctive feature of the new economy is that knowledge becomes a productive force. The main resource development is increasingly becoming the people and the knowledge they possess, intangible assets and growing expertise of personnel. Intangible assets of the organization often completely identified with the intellectual capital (Milner 2013). Undoubtedly, the intellectual capital is a leading capital of the Company which is the basis of any economic process at the present stage of development. The basic means of production of today's economy are the intellectual abilities of the individual. The development of science and technology intellectual abilities develop into intellectual property, and later in the intellectual capital, acquiring autonomy reproduction and increment. The evolution of intellectual abilities, the formation of intellectual capital in the economic development of society led to the fact that the only factor, the development of which has a fairly comprehensive resource under current conditions and the near future, both in qualitative and quantitative parameters, and over time, became the intellectual capital (Krutii and Novikova 2006). The challenge of improving human capacity in terms of innovation-oriented development is associated with the solution of innovation-oriented human resource management. In our opinion, it is natural that innovation management as a method of efficient management in sectors of the economy cannot be effectively implemented if no measures are taken to build innovation-oriented human resources. This is especially important for high-tech, high-tech industries. Belonging to the category of industries it is characterized by high-tech knowledge-intensive production index, determined by the ratio of total expenditure on research and development work (R&D) to the volume of gross output of the industry. It is believed that high-tech industries, the figure should be in the 1.2-1.5 times or greater than the average for the manufacturing industry. The scheduled times to the market in the mid-80's index-tech industries accounted for 01.03%, and the most high technology in the civil sphere instrument-making industry were 6.3% and 5.1% Electrical. The defense industry has been the most high technology in aerospace, where the figure is closer to 50%. The absolute amount of R&D aircraft was great, but because of the dominance scale serial production there it was less than space- and satellite building, nuclear, and other industries where R&D costs were substantially higher than the average for the national economy. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Today, the level of research intensity is extremely low, while the characteristic feature of the world economy at the present stage is the advanced development of high-tech, high-tech industries. Industrial and innovation policy is called upon to strengthen measures in this direction. At the same time one of the main issues that define their recovery and economic growth is to ensure that highly qualified specialists in all spheres of activity of the enterprises of these industries - from engineer to economists who should become the locomotive of the revival of the domestic industry, always has a unique product. Some experts pointed out that the reform years were unfavorable, especially for hightech industries. Today, they are experiencing a much greater decline (compared to the average level for the industry as a whole). There are those who have either changed its output of lower technological level, or idle, and quickly grow old without any orders or, consequently, funds for the renovation or the very meaning of its existence. 3. The Methodology and Model Address the priorities of socio-economic development is impossible without the support of the formation of society. Through the education system should be created personnel infrastructure, adequate to modern technologies used in major industries and services, to ensure the reproduction and development of innovative potential of the economy. To achieve these goals it is necessary to solve a number of problems, most important of which are: - development of adequate human resources to modern technology infrastructure of basic industries and services; upgrade vocational education; - providing conditions for development of scientific schools in the basic and engineering education in the field of information technology; priority development of university research and on its basis - venture units and enterprises (Zelentsova 2006). The current state of development of human potential of the economy can be described as more narrowly focused training in the education system of the country and deployment of retraining directly in production at enterprises and organizations that can be attributed to internal factors of formation and development of human potential (Figure 1). On the other hand, the increasingly evident effects of external factors that lead to the integration of both countries into the world economy, and in the sub-regional, which, in particular, seems EAEC. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Figure 1. Schematic of the formation of innovation-oriented human resource capacity of the national economy Innovation-oriented economy SPAIIDKR-2014, SPIID - 2019 Personnel Potential Inner factors The system of vocational education and training in the workplace, in organizations The higher, middle- special and vocational education External factors Migration of innovationoriented staff Educational space of the Eurasian integration Source: created by the authors Note: SPAIIDKR - State program for accelerated industrial-innovative development of Kazakhstan Republic SPIID – State Programm of industrial-and-innovative development 4. The Findings For our research on the selected theme, it is important to assess the state of Kazakhstan's so important, in our opinion, the global mechanism as the National Innovation System (NIS), which determines the formation and development of innovation infrastructure, which in turn is the basis for innovation-oriented development On the one hand, the education system, and on the other - science and research and development. In particular, if you look at the history of Kazakhstan's NIS, which dates back to 2003, when founded the National Investment Fund (NIF), with the aim of increasing innovation activity in the country. In 2005, the NIF transferred state-owned shares of JSC "Center for Engineering and Technology Transfer", and in 2012 on the basis of NIF established the development institution focused on innovation - JSC "National Agency for Technological Development" (NATD). At present, the NATD is part of eight regional parks, four industrial design offices, 21 commercialization offices at universities and research institutes, five international technology transfer centers, three domestic and four foreign venture fund. In addition, there is a system of support tools - innovation grants, services, technology business incubation and commercialization offices, project and venture financing. From the reports of NATD it shows that the agency has a full line of tools to support innovative projects at all stages - from the idea to the development and adoption of them in manufacturing. Through grants existing enterprise can improve the efficiency of its production, aspiring entrepreneurs can realize their ideas and bring them to the level of operating companies and researchers can commercialize their inventions. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Now the budget allocated for the implementation of the project, ranging from 2 to 150 million tenge. Most grants are designed to support the development of technology in the hydrocarbon industry, mining, agriculture and biotechnology, chemistry and petrochemistry, mechanical engineering, in the field of alternative energy and information and communication technologies. In general, over the past five years able to identify about 3500 ideas and developments, including the support provided to 570 projects worth 12.6 billion tenge. According to grantees during the implementation of innovative grants were received 83 patents and four registered trademarks. Commercialization centers and offices have been conceived as a tool to market for new products and technologies through the search, selection and assistance in promoting development and technology with commercial potential. So, at the beginning of 2015, according to NATD through these offices received 406 applications, of which 122 projects were selected to support the concept and further commercialization. Four industrial design offices to support the domestic machine-building companies in the development of new products. During the reporting period, experimental design bureau developed the 419 and purchased 69 sets of design documentation, which, according to the Agency, allowed enterprises to master the production of 198 new items. Through the regional technology parks in 2010, 116 novice innovative enterprises provided services technology business incubation. With the support of five international technology transfer centers together with international technology centers in the United States, South Korea, China, Norway and France sold two dozen international projects. Studies have shown that there is an imbalance in the ratio of cost to the process and product innovation: it turns out that entrepreneurs tend to spend more money to process innovations, rather than food. On average, over five years for the development of new or modernization of existing production techniques have been directed almost 70% of all expenditure on innovation. Thus, we can conclude that the entrepreneur in Kazakhstan more inclined to purchase new manufacturing equipment, think about the modernization of the organization of the method, you can create a radically new product (Masayev 2015). In our opinion, this is only one aspect of the costs of not fully formation of the NIS countries. Another condition is related to the development of R&D. With the growth of internal development costs (five years almost doubled) and the number of staff employed in this area, the number of research organizations has been steadily declining: in 2007 there in the country were 438, and then in 2013 they decreased by 97. This trend indicates a decrease in research areas. And, perhaps, one of the main issues, along with the NIS, is the lack of personnel. And total, command-and-control approaches to the management and financing of applied and basic science does not give the desired effect without bridging the gap between science and education, without the creation of the scientific environment in society through the education system (Masayev 2015). World practice shows that "in the XXI century. Problems of development of scientific and technological potential, mobilizing scientific resources have become even more important in the transition to an innovation economy, or an economy based on knowledge (the main resource of the "new", innovative economy and high Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 technologies). Development of scientific potential is becoming the decisive factor of economic growth" (Shalabayeva 2015). It is the component personnel emphasize many experts saying about the human factor in the economy. In general, most experts comes to the conclusion that the internal factors of formation of innovation-oriented human resource capacity is not implemented fully, causing an emergency need for increased external factors. Kazakhstani companies are invited to foreigners. And one of the major problems is lack of professionals. As a result of the shortage of professionals and specialists from employers is no choice but to seek a pro abroad. However, foreigners are not always so good, and the ratio "price - quality" is often not in their favor. Kazakh companies more logical and promising to develop their staff, they are most likely, will not leave, moreover, will share their experience with colleagues. It turns out; the money spent on the study will come back in the form of profit for a long time. In fact, we are talking about investing in human capital (Shalabayeva 2015). However, in our opinion, there is no other way than building a quality level of educational services of the domestic training system simply does not have, even if we consider only the problem of consistent traffic to build an innovation economy. In countries with developed market economies, capital formation is in direct proportion to the reward. Therefore, the most important form of expression capital formation is an investment in human intellectual ability to transform it. It is necessary all the same to emphasize how relevant this problem for Kazakhstan. In particular, the Kazakh experts were interviewed heads of a number of Kazakh companies, which, as noted by V. Atoyants-Larina, unanimously declare that graduates of colleges and universities do not possess the practical skills that are based on current business realities. It is therefore important to introduce in the educational process more than workshops, as well as promote the development of the ability to work with technology, that is to create a modern material and technical base. The situation today is so that businesses have to retrain them, that is to invest in them considerable investment. These organizations now realize that graduates immediately after graduation will not be able to bring the company a lot of money - it is necessary to invest. If successfully implemented the dual education, the graduate will be much quicker to delve into the production process. Thus, companies will be able to save your money. This is beneficial both for the state and for the enterprise (Atoyants-Larina 2015). In recent years, many experts are developing issues of improvement of internal organization in schools. One of the main aspects of university management is updating and creates conditions for the generation of knowledge, the source of which is the staff. Change the priority in the activities of teachers and administrative staff in the university requires a systematic approach to human resources management. The university as economic self-organizing system, -on the opinion of the expert - must be able to change their own state in response to a possible disturbance; variety perturbations require corresponding diversity of possible states. Otherwise, such a system cannot meet the challenges of governance put forward by the external environment, and will be ineffective. The absence or lack of diversity may indicate a violation of the integrity of the subsystems that make up the university as a system. Organization of personnel management can be represented as a system combining the conscious actions of people to achieve the goals of the university. The basis of the university is the Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 people, they form the organizational culture, internal climate, and it depends on them working efficiency. For the modern university timely formation of human resources, meeting the requirements of the innovative nature of today's economy it is one of the primary tasks. The problem is not only in the level of vocational training, training of professionals and scientists, but also a change in the personal appearance of the staff motivated, above all, to innovative development, initiative, self-learning. The staff of the university today - a proactive personality, motivated for constant personal development, able to work in a team and contribute to achieve the goals of the university. Task involvement of the teaching staff and employees in the process of solving the strategic and operational goals and objectives to solve a range of measures including program material and non-material incentives, vocational, management, information and communication and social development (Kocherga 2010). In the above context, the particular significance of the personnel system in high school is based on the competence approach. This learning model is focused on strategic direction, development of skills and competencies to gain knowledge and competitiveness not only faculty and staff, and the university as a whole. Staff development is of strategic importance, without which it is impossible to move forward. The modern university, performing social functions, education becomes a social institution of the state, allows a person to learn continuously, continuously improve their professional level. Continuous training of scientific-pedagogical and administrative-managerial employees of the university, through modern teaching methods allow to introduce innovative technologies of e-learning in the educational process that improves the quality of educational services, improving knowledge management system, contributes to the development of scientific schools and systems of university management and improvement of the university generally. Deep penetration into all spheres of our life information and innovative technologies, the introduction of onlinelearning technologies, including e- Learning, leads to the creation of innovative human recourse strategy and knowledge management system. It is designed to control the entire body of knowledge within the organization and its intellectual assets (intellectual assets). Standing today global challenges for the education system can be implemented only by changing the approach to the educational system, both from the state and from the academic community, in terms of changes in the requirements, evaluation criteria, training programs, performance indicators and incentive performance to the most important human resource is scientific educational and pedagogical. Frame single system standardization requirements for the licensing and accreditation standards and indicators of change vectors of development of high school, not only in the direction of training organizations, but students and self-learning (Kocherga 2010). All these features are characteristic of the Kazakhstan system of training and some prospects for innovation to strengthen human resources in Kazakhstan is seen in the development of the Eurasian integration processes, particularly taking into account formed the main areas of industrial cooperation between Russia, Kazakhstan and Belarus. The latter can be a strong driver for positive interference of the educational systems of the participating countries EAEC. Of course, on one condition is to carry out the formation of a single educational space, without prejudice to the national education systems and their identity. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 Deep integration of education, science and industry and should be implemented in the leading regional universities in the country, which is an effective form of realization of competitive advantages for socio-economic development of the region as a whole. 5. Summary and Conclusions 1. Development of human capital theory has gained momentum from the real problems of practice transformation of the economy and its development into the area of high, high-end technologies that come into conflict with the traditional system of staffing of the economy. 2. The concept of human capital makes it possible to look at the problem of the relationship of production and labor in terms of human capacity as a resource, giving additional impetus to the growth of labor productivity in the innovation economy. At the same time, the study of the world experience of innovative development allows us to conclude that a rational use of human resources and innovative development of human resources is rigidly connected with the need to develop new approaches to human resources management and staff of enterprises, development of new technologies and methods to improve them. 3. Applications under this work system analysis shows: - The current state of development of training for the innovation economy in Kazakhstan is far from the ideal state of balance in the education market with the demands of the labor market in innovation-driven personnel; - Systematic analysis must be accompanied by a systematic approach to the management of these processes of adaptation, taking into account the diversity of internal and external factors influence. 4. This is especially important in today's environment is not so much a world of economic globalization, but, as with the light of current and prospective neighbors realities of Eurasian integration, referring to the potential for integration of national educational systems into a single educational space on a parity basis. In general, the current state of the education system and training in Kazakhstan, her break from the real needs of the socio-economic system, the absence of relationships with the scientific field of activity shows that the processes of formation of innovation-oriented human resource capacity is difficult to channel into effective results is the positive impact of economic integration in the world economic community and subregional groupings in the states. 5. Of course, the factor of integration with the objective need to be taken into account in the formation of a systematic approach to the problems of regulating the formation and development of personnel potential of Kazakhstan's economy. On the other hand, the analysis shows that there is no experience of the full system approach in the formulation of this problem not only in Kazakhstan but also in the post-Soviet countries, including Russia. In fact, taking place approach solves narrowly focused, on the one hand, improvement of the internal organization of the education system without a focus on the needs of the labor market and the real economy, on the other hand, the development of training and education in the production without reference to the education system, with the third party development research without reference to the scientific potential of the education system, etc. Proceedings of 33rd International Business Research Conference 4 - 5 January 2016, Flora Grand Hotel, Dubai, UAE, ISBN: 978-1-922069-94-8 References Atoyants-Larin, V 2015 Without detracting from the production, Expert Kazakhstan Journal, No. 19 (515), pp. 32-33 Dubik, E 2013, Human Capital for innovative development of Russia, Journal of Economics, number 5 (102), pp. 22-256. German, M and Pomuleva, N 2012, Human capital as a major factor of innovation development, Bulletin of Tomsk State University, Economy, Vol. 1 (17), 2012, pp. 149-1537. 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