OECD Regional Development Working Papers

Working papers from the Regional Development Policy Division of the OECD cover a full range of topics including regional statistics and analysis, urban governance and economics, rural governance and economics, and multi-level governance. Depending on the programme of work, the papers can cover specific topics such as regional innovation and networks, the determinants of regional growth or fiscal consolidation at the sub-national level.


Exploring Policy Complementarities in Transition Economies

The Case of Kazakhstan

Policy complementarities have often been overlooked in transition economies, leading to the exclusion or partial adoption of reforms. This paper examines the key determinants of successful transition strategies, and concludes that an approach exploiting complementary relationships and interactions between policies is most likely to result in a welfare improvement. Based on nine policy areas from the European Bank for Reconstruction and Development (EBRD) Transition Indicators database, composite indicators measuring reform implementation and complementarity are constructed. Panel data estimates for 30 countries over the period 1989 to 2012 demonstrate a positive association between improvements in reform complementarity and economic growth. Moreover, the effects are found to persist over time for up to two years after the initial policy change, and are robust to the inclusion of a wide range of control variables. Applying these findings to the case of Kazakhstan illustrates that comprehensive reforms to a targeted group of complementary policies generate sustained increases in output growth, whereas a partial reform strategy results in a loss of welfare.


Keywords: Kazakhstan, transition economies, panel data, structural reforms, reform indicators, complementarity, economic growth
JEL: C33: Mathematical and Quantitative Methods / Multiple or Simultaneous Equation Models; Multiple Variables / Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models; O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Economic Growth and Aggregate Productivity: General; P2: Economic Systems / Socialist Systems and Transitional Economies
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