ADB: Reforms can fast-track Kazakhstan’s economic diversification
The research ‘Kazakhstan: Accelerating Economic Diversification’ defines constraints that hinder economic growth and provides a comprehensive analysis of structural reforms that will help the country realize its growth potential as well. Besides, it notes that consistent and successful efforts to implement reforms can, on average, add 1.2 percentage points per year to Kazakhstan's GDP.
In the words of ADB Country Director for Kazakhstan Giovanni Capannelli Kazakhstan has to speed structural reforms in order to support economic diversifications.
As the ADB Country Director for Kazakhstan believes these reforms include improving the business climate in the country, increasing competitiveness and increasing the participation of the private sector in the economy.
According to him, since independence in 1991, the transformation of the economy of Kazakhstan was mainly associated with a sharp increase in oil and gas exports. Despite the fact that in 2006 Kazakhstan entered the category of middle-income countries, the decline in prices for oil and other commodities in 2014 demonstrated the country's vulnerability to external shocks and limited the amount of revenues to the state treasury.
The research shows the future growth will depend on identifying sectors in which Kazakhstan has a high growth potential. Namely the food industry, metals and the chemical industry. As of the agricultural sector, the reorientation of subsidies towards infrastructure investments, improved access to finance, and the promotion of innovation can significantly improve productivity. Increased investment in infrastructure plays a critical role in ensuring linkages with undeveloped markets, reducing transport costs, and supporting of foreign trade goods’ production.
In addition, there is a big potential in transit trade. And Improving the efficiency of transport infrastructure in its turn can provide additional growth in other export sectors including manufacturing.
It should be noted ADB supports Kazakhstan since 1994. More than five billion dollars in the form of sovereign loans, non-sovereign loans and guarantees have approved for this period. ADB's operational activities in Kazakhstan contribute to the development of transport links, private entrepreneurship, reduction of social and spatial disparities, social equity and inclusive growth, and the development of products and services in the field of knowledge. ADB also facilitates the participation of Kazakhstan in the Central Asia Regional Economic Cooperation (CAREC) Program.
ADB is committed to achieving inclusive and sustainable development in the Asia-Pacific region while continuing its work to eradicate extreme poverty.
For reference: the Asian Development Bank was established in 1966, it consists of 67 member-countries, 48 of which are located directly in the region. In 2017, ADB operations amounted to 32.2 billion dollars, including co-financing of 11.9 billion dollars.
Kairat Zhandybayev
