ASTANA — Kazakhstan has a unique opportunity to not only reduce its dependency on extractive resources but also to position itself competitively in high-value-added segments of the global economy by engaging more deeply in global value chains, says a new study from the Asian Development Bank (ADB) and the Islamic Development Bank (IsDB).
Photo credit: The Astana Times
The report titled Kazakhstan’s Resource Economy-Diversification Through Global Value Chains notes that despite being an upper middle-income economy, Kazakhstan’s activities in global value chains over the past two decades have largely been in sectors and stages of the value chain characterized by low complexity and limited innovation making the economy vulnerable to external shocks.
“Kazakhstan’s greater trade integration into global value chains can help the country build a more diversified and resilient economy, and be better prepared to navigate global economic shifts, including the transition to greener energy sources,” said ADB Chief Economist Albert Park, reported the ADB’s press service on Oct. 17.
The report identifies key areas where Kazakhstan could strengthen its role in global value chains, including the food and beverages industry, as well as segments related to machinery and transport equipment. Even though mining and metals compose nearly 80% of the economy’s annual gross exports, the metals manufacturing sector shows relatively high participation rates compared to the mining sector, and its higher value-added segments offer greater potential for increasing growth.
The publication highlights challenges restricting Kazakhstan’s ability to fully capitalize on global value chain opportunities. Actionable policy recommendations for addressing these constraints and enhancing Kazakhstan’s integration into global value chains include reducing trade barriers, expanding trade agreements, and fostering a business environment that supports innovation and foreign direct investment. The report also calls for strategic investments in digital infrastructure to overcome the challenges posed by the country’s landlocked status and boost competitiveness in global markets.
The report is the latest in a series of collaborative publications between ADB and IsDB, focusing on how developing economies can leverage global value chains for sustainable development.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members – 49 from the region.
Working across its 57 member countries, the IsDB is committed to equipping people to drive their own economic and social progress at scale, putting the infrastructure in place to enable them to fulfill their potential.
The IsDB builds collaborative partnerships between communities and nations and works towards the UN Sustainable Development Goals by harnessing the power of science, technology, and innovation, as well as fostering ethical and sustainable solutions to the world’s greatest development challenges.
