Development Centre

Multi-dimensional Review of Kazakhstan - Initial findings

 

20/01/2016 -The first volume of the Multi-dimensional Review of Kazakhstan released today describes the driving forces of development in Kazakhstan and identifies the major constraints to equitable and sustainable growth and well-being.

 

Kazakhstan is well-placed to catch up with OECD income levels by 2050, says this initial assessment. Still, deep structural reforms are needed to avoid the middle-income trap and realise the objectives of the Kazakhstan 2050 Strategy.

 

Following independence in 1991, Kazakhstan experienced significant economic and social transformation backed up by a strong social policy. Poverty fell dramatically. Inequality remains low and living standards improved, notably in material conditions. But health outcomes remain worryingly poor.

 

The country’s growth performance from 2000 to 2014 has been impressive: 7.7% per year in real terms, well above the 4.15% needed to catch up to OECD income levels by 2050. This helped create 2.3 million jobs. However, Kazakhstan’s high dependence on natural resources ­­­­- extractive industries account for 16% of GDP ­- as well as its geographic position make it vulnerable to external shocks. Despite prudential measures and bodies such as the National Fund to cushion the economy from volatile commodity prices, large oil-related flows represent both a significant opportunity for national wealth and a challenge to macroeconomic and financial stability, highlighting the need to diversify the economy. Achieving this will require greater investment, which at 23% of GDP is lower than in comparable countries, to help workers move to most productive sectors, raise competitiveness and increase economic complexity.

 

Other identified key constraints to development include:

  • The concentration of economic clout in the hands of the state and a few private actors, constraining investments and movement into dynamic new sectors.
  • A fragile financial sector unable to finance Kazakhstan’s development needs.
  • The lack of effective environmental regulation, challenging the sustainability of the current development model.
  • Corruption and perceptions of corruption, undermining the entrepreneurial spirit and willingness to make long-term investments.
  • Thin capacity to implement key government functions, undermining the quality of service provision.
  • Ongoing skills gaps, requiring a more integrated approach to better match skill formation to  labour market needs, particularly the requirements of small and medium enterprises (SMEs).

The initial assessment will be followed by two others phases – in-depth analysis and strategy building. The whole three-phase OECD Multi-dimensional Country Review process is conducted over 18 months. More about the OECD Multi-dimensional Country Reviews can be found here: http://www.oecd.org/dev/mdcr.htm

 

Please  contact Bochra.Kriout@oecd.org(+33 145 24 82 96) for further information or to request a copy of OECD Multidimensional Review of Kazakhstan. An executive summary is also available in Russian.