Development Centre

Progressively changing the State’s involvement in the economy is key to meeting Kazakhstan’s goal of reaching OECD income levels by 2050

 

15 June 2017 - Further modernising the state’s role in the economy would help unlock key development drivers, according to the second volume of the OECD Multi-dimensional Country Review (MDCR) of Kazakhstan. This entails moving from command-and-control regulation and direct intervention in the economy to providing incentives for investment, good corporate governance and environmental stewardship. More accessible and better evaluation would increase the transparency and quality of public programmes.

The report released today at the Astana Economic Forum was presented by Naoko Ueda Deputy Director, and Jan Rielaender, Head of Multi-dimensional Country Reviews, both of the OECD Development Centre, in the presence of Vice-Minister Madina Abylkassymova.

Kazakhstan has embarked upon an ambitious reform agenda to realise its aspiration of becoming one of the top 30 global economies by 2050. Kazakhstan’s MDCR presents an in-depth analysis of the key constraints to development in the country and offers policy recommendations in four areas to address them: diversification and resilience, finance for development, privatisation and the role of the state in the economy, and environmental regulation.

The country has achieved remarkable development performance between 2000 and 2014, largely pushed by extractive industries and high commodity prices. The result has been significant improvements in the quality of life of its citizens, with five-fold increases in pensions and salaries, the creation of over 2 million jobs, and a dramatic fall in poverty rates. To sustain economic progress, overcome recent difficulties and drive improvements in well-being to realise its 2050 aspirations, Kazakhstan will need to ensure that its economy becomes more productive, diverse, and sufficiently flexible and resilient in the face of an ever-shifting external environment.

Continuing economic transformation requires further reforms to how the Kazakhstani state intervenes in the economy. The state can change its role from driving structural transformation through state-owned enterprises, investment programmes or directed credit to creating a supportive, transparent and stable operating environment for private actors to make those investments. A number of ongoing reforms support this direction, including an ambitious privatisation programme, civil service reform, regulatory simplification and competition regulation reforms Further transformation is necessary, such as increasing the role of the private sector in the diversification agenda, improving framework conditions to modernise and expand the banking sector, further modernising the management of state-owned enterprises and making environmental regulation less constraining for businesses and more effective through integrated pollution control and the adoption of the polluter-pays principle. Kazakhstan should step up its efforts to monitor and evaluate key public policy initiatives, from investment and diversification programmes to the privatisation agenda.

This in-depth analysis stems from the initial assessment that identified binding constraints. The next phase will support Kazakhstan in incorporating recommendations into its strategic vision and development plan. For more information about the OECD Multi-dimensional Country Reviews, visit: http://www.oecd.org/development/mdcr

This MDCR is part of the OECD Kazakhstan Country Programme, a two-year co-ordinated effort to enhance the relationship between the OECD and Kazakhstan. The Kazakhstan Country Programme, carried out over the 2015-2017 period involves 19 policy reviews, consideration of 29 OECD instruments and interaction with seven OECD committees or subsidiary bodies.

 

For further information or to request a copy of OECD Multi-dimensional Review of Kazakhstan, please contact Juan Ramón de Laiglesia at jr.delaiglesia@oecd.org or tel: +33 1 45 24 82 90. A Russian version of the executive summary is available upon request.