Competitiveness and Private Sector Development: Kazakhstan 2010

Sector Competitiveness Strategy

image of Competitiveness and Private Sector Development: Kazakhstan 2010

Since 2000, the economy of the Republic of Kazakhstan has been growing at an annual rate of between 8%-9%, making it one of the ten highest performing economies in the world. Kazakhstan alone attracts more foreign direct investment than all other Central Asian countries together. To date, the country’s strong economic performance has been driven largely by its natural resources sector. The oil and gas sectors alone attract three quarters of foreign investment inflows. However, Kazakhstan’s non-energy sectors also have competitive advantages that could be potential new sources for growth.

In 2009 Kazakhstan launched a far-reaching programme to diversify its sources of foreign direct investment. To support this effort, it asked the OECD to undertake a three-year Sector Competitiveness Review. This report represents the first phase of this Review, which is an assessment and strategy to help Kazakhstan enhance the competitiveness of non-energy sectors including agribusiness, fertilizers, logistics, business services and information technology. While it acknowledges that the government has successfully implemented a first generation of business climate reforms, the report recommends that sector-specific policy barriers be further addressed. For example, policy makers could stimulate quality improvements and modernise production in some sectors by facilitating access to finance, attracting modern retailers and addressing skills gaps in the  workforce.

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Sector Competitiveness Strategy Recommendations and Road Map

The Sector Prioritisation Framework has identified a number of sectors within Kazakhstan’s economy for further analysis: agribusiness, logistics and chemicals for agribusiness and IT/business services. Both sector-specific and economy-wide barriers can be addressed through policy measures such as investment policy, enhanced investment promotion capabilities and human capital development. The report recommends that the Government of Kazakhstan implements the OECD Investment Policy Review, while other policies will require collaboration between government and the private sector. Investment promotion capabilities include measures such as a unified national investment promotion organisation, sectorfocused FDI promotion strategies, a network approach, an increased role of ministers and filling information gaps for investors. Sector-specific recommendations address specific policy barriers across the targeted sectors and focus is to be placed on these sector-specific strategies: development of modern retail, access to finance and investment policy and promotion. Within the IT sector, the government should enhance public-private policy dialogue, build business linkages, develop a supplier database and improve IT infrastructure.

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