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Multi-dimensional Review of Kazakhstan

Volume 2. In-depth Analysis and Recommendations

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Kazakhstan has embarked upon an ambitious reform agenda to realise its aspiration of becoming one of the top 30 global economies by 2050. The country’s economy and society have undergone deep transformations since independence. To sustain economic progress, overcome recent difficulties, and drive improvements in well-being to realise its aspirations, Kazakhstan will need to address a number of challenges to ensure its economy becomes more productive and diverse, and is sufficiently flexible and resilient in the face of an ever-shifting external environment. This next stage of economic transformation will require continuing reforms. This report discusses policy actions to address four key obstacles to development in Kazakhstan, identified in Volume 1 of this review. It presents in-depth analysis and recommendations to improve the economy’s resilience through diversification, to mobilise financing for development, to transform the role of the state in the economy, including through privatisation, and to improve the effectiveness of environmental regulations.

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Diversification and resilience in Kazakhstan

OECD Development Centre

Economic growth in Kazakhstan between 2000 and 2014 was impressive. During this period the economy also grew increasingly dependent on natural resources, and oil in particular, setting up the economy for challenging times when the commodity cycle ended. This chapter examines the role that industrial policy plays in encouraging diversification in Kazakhstan. It examines the pattern of concentration in the economy using trade and industrial production data as well as the product space. While diversification has been prominent in the policy agenda since the mid-1990s, industrial policy has been much more developed since 2010, with the implementation of the first State Programme on Advanced Innovative-Industrial Development (SPAIID). This programme introduced a large number of actors and instruments of industrial policy, with the aim of halting deindustrialisation and creating the basic conditions for the emergence of strong industrial entrepreneurship, although with disappointing success in promoting diversification in the short run. Industrial policy can help the Kazakhstani economy to be more resilient, but to that end it needs to become more flexible and adaptable and mobilise market forces rather than act as a substitute for them.

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