Editor’s note: The recent analytical piece published on Zakon.kz, an online news outlet, which is translated from Russian, reveals the path of Kazakhstan to economic progress and sustainable development since 1991. It shows how the country achieved significant results in implementing large-scale market reforms in the post-Soviet space.
NUR-SULTAN – Kazakhstan is celebrating its 30th anniversary of independence this year. During this time, the country changed its image on the international arena and has become an economic and political leader in the region.
“This year marks the 30th anniversary of Kazakhstan’s Independence. This is an important date in strengthening the revived Kazakh statehood and of freedom, which our ancestors dreamed. For history, 30 years is a moment that flies by in the blink of an eye. However, for many people this is a whole era of difficulties and joys, crises and ups,” said Kazakh President Kassym-Jomart Tokayev in his article titled “Independence Above All.”
The first years of independence were the most difficult for the country. Kazakhstan inherited a weak economy. In 1991, the country’s Gross Domestic Product fell by 11 percent. The change was possible only by the end of 1996, when it increased by 0.5 percent. The next year, the growth was 2 percent. The inflation rate in 1991 was 147.12 percent with a monthly rise in prices of 57-58 percent. In 1992, this figure was already equal to 2962.81 percent. The situation leveled out at the end of 1993, setting the average rate at around 2169.8 percent. In 1994, it was cut by half to 1160.26 percent, with the decline in following years reaching 1.88 percent in 1997.
In the same period, the unemployment rate reached 4.6 percent. In 1995, it dropped to 3.2 percent. Between 1992 and 1994, there was a sharp increase in the unemployment rate with a massive outflow of the population – 1.1 million people left the country. The country’s budget deficit by 1994 was 20.6 billion tenge (US$ 47.8 million).
The Kazakh government developed and launched the Strategy for the Political and Economic Development of the country up to 2005. According to the strategy, the government started a program of privatization, economic reforms, and launched the transition from the Soviet planned economy to a market economy. From 1991 to 2000, a whole class of small and medium-sized businesses appeared in Kazakhstan. They bought 34500 objects of state property for 215.4 billion tenge (US$ 499.7 million).
In 1997, the state faced another economic crisis caused by a sharp fall in the Asian market. This crisis hit all economic players, who, in pursuit of profit from investments in the rapidly growing economies of East and Southeast Asia, brought themselves to bankruptcy. The financial losses amounted to billions of dollars, which affected the economies of the countries of the former Soviet countries, including Kazakhstan.
Capital outflows were followed by a collapse in energy and commodity prices on world markets. This alignment led to economic destabilization in Russia, which influenced the reduction in the cost of Russian goods and, as a result, had an impact on Kazakhstani producers. To stabilize the domestic market, the Kazakh authorities reduced imports from neighboring countries, and devalued the Kazakh currency. It saved the country’s economy from large-scale turbulence.
According to the Asian Development Bank, Kazakhstan’s pragmatic economic policies helped the country to become an upper middle-income state and an economic and political leader in Central Asia.
Kazakhstan has managed to reduce poverty, increase the population’s access to primary education, and improve gender equality and social security for children and mothers. According to statistics, the share of the poor, based on the national poverty line, in comparison with 2001 in the country has decreased from 46.7 percent to 2.6 percent. According to the International Labor Organization, Kazakhstan has a consistently low unemployment rate. Since 2011, this indicator has never exceeded 5 percent.
For several years now, the Kazakh authorities have been following a program of diversifying the country’s economy. The government is implementing programs to modernize agriculture, improve the usage of public resources, increase productivity in the non-oil sector, and ensure the transition of the manufacturing industry to more promising industries with high export potential.
To maintain high rates of economic growth, Kazakhstan seeks to implement structural changes in the economy, which was reflected in the Address of the First President the Kazakhstan’s way 2050: Common Goal, Common Interests, Common Future in 2014.
Recently the country took the path towards an innovation-oriented economy aiming at the formation of a favorable business environment and investment climate and increasing the intensity and productivity of the national economy.
According to Kazakh expert Andrei Chebotarev, despite the pandemic and a general decline in GDP, by the end of 2020, the manufacturing industry grew by 3.9 percent. Gross value added is also growing, amounting to 9.3 trillion tenge (US$ 21.5 million) over the past year. Exports of high value-added products have also increased by 5 percent.
The diversification of the economy made it possible for more and more local products to enter the markets nationwide. Their quality is in no way inferior to the quality of foreign manufacturers.