Skip to main content

Advertisement

SpringerLink
Log in

Kazakhstan: extractive resources, governance and inclusive development

  • RESEARCH PAPER
  • Published:
Journal of Social and Economic Development Aims and scope Submit manuscript

Abstract

Kazakhstan has large natural resources (hydrocarbons and minerals), which have enabled it to achieve a position of relative prosperity compared with other ex-Soviet countries in Central Asia. This article aims to examine the economic and social impact that the exploitation of these resources has had on the country. More specifically, it seeks to assess the consistency of the economic growth achieved, the extent of national productive diversification, as well as the wealth distribution within the Kazakh social structure. The article also attempts to appraise these effects in Kazakhstan in relation to some of the postulates of the resource curse thesis. One of them predicts that under weak and autocratic institutional frameworks, the benefits of the extractive sector tend to be captured by elites close to power. Poverty in Kazakhstan has declined overall, albeit with peaks in recent years and marked inequalities between the country's regions. Public spending on social policies (education, health, social protection) has been disproportionate and has lagged behind that of countries with comparable economic conditions. Social deprivation and civil unrest are witnessed in the country, as evidenced by the riots that rocked some of its cities in January 2022.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: WDI/World Development Indicators, World Bank

Fig. 2

Source: Darvas (2021)

Fig. 3

Source: EITI reports, IMF Art IV Kazakhstan reports. EITI reports have not been published since 2019. According to IMF data (IMF, 2022), the main oil revenues accounted for 3.4% of GDP in the difficult year 2020 and 5.3% of GDP in 2021 (19.3% and 31.1%, respectively, of total revenues)

Fig. 4

Source: UNDP HDI Data. Report 2021–2022

Fig. 5

Source: UIS-UNESCO. G 6: benchmark group countries UMC: upper middle-income countries

Fig. 6

Source: WHO. G6: benchmark group countries. UMC: upper middle-income countries

Fig. 7

Source: WHO. UMC: Upper middle-income countries

Fig. 8

Source: ILOSTAT and ILO/International Labour Organization World Social Protection Report 2020–2022 (ILO, 2021). ILOSTAT data series on social protection expenditure cover the period up to 2017 (until 2012 for Malaysia) and the data available thereafter are those of the ILO World Social Protection Report 2020–2022

Similar content being viewed by others

Data availability

Databases and all relevant raw data in this article are freely available to any researcher wishing to use them.

Notes

  1. After becoming violent, the January 2022 protests were bloodily suppressed by the government, with assistance from Russian troops (under the regional CSTO/Collective Security Treaty Organisation); they resulted in 232 deaths and thousands of injuries and detainees.

  2. Some studies on the negative effects of the curse have tended to distinguish between situations of abundance and situations of dependence on natural resources. The latter are generally considered more conducive to such unfavourable effects. A distinction has also been made between 'point source' natural resources, with a concentrated and manageable flow of income, and 'diffuse source' resources (e.g. agriculture) (Bulte et al. 2005). Kazakhstan has both abundance and dependence on 'point source' extractive resources (mainly hydrocarbons).

  3. Some critical aspects of the official estimates of poverty and inequality in Kazakhstan are discussed in Sect. "Social development in Kazakhstan".

  4. The National Fund of the Republic of Kazakhstan (NFRK) is deposited and managed at the Central Bank of Kazakhstan. It receives a significant part of the taxes on extractive activities and makes transfers to the budget according to its changing needs (annual guaranteed amounts and special amounts with an anti-crisis objective). The NFRK holds a significant volume of foreign currency reserves.

  5. Hirschman (1981) distinguished between consumption linkages (demand generated by revenues from local resources used by the extractive sector), fiscal linkages (public revenues generated by the export sector that can be used to support other local industries) and production linkages (local involvement, either in the supply of inputs or services to the extractive export sector (backward) or in the processing of extractive materials (forward).

  6. More recently, see, e.g., Morris et al. (2012) on the need for active and coherent government policies to foster production linkages in countries where extractive industries operate. For Rodrik (2004), the lack of specific public inputs can be an impediment to industrial development in general.

  7. The state agency (NADLoC, National Agency for the Development of Local Content) is in charge of registering transactions and monitoring compliance with legal provisions.

  8. A massive privatisation process took place in the 1990s under conditions of questionable regularity (OECD 2017). It benefited the country's emerging economic elite as well as international investors. The expansion of growth in the following years allowed the reconstitution of new public companies and holdings in various sectors, including oil and mining.

  9. It can be said that the main economic power in the country has been concentrated in the hands of the state and a small number of privileged private actors. This situation has been described as that of a “crony capitalism” (Nurseiit and Charman 2018).

  10. The average effective tax rate (AETR) theoretically calculates the percentage of net revenues generated over the life of the oil or mining project that goes to the government. The estimated AETR for Kazakhstan is around 70% (IMF, 2018). This level is close to the AETR estimated for a number of oil and gas producing countries (Mansour and Świstak 2017). AETR simulations for some mining projects in Kazakhstan result in levels lower than those for oil (46% for gold and 38–60% for copper, depending on extraction costs) and lower than those estimated for countries producing the same metals (Manley 2017, 2018).

  11. In 2017, personal income tax revenue in Kazakhstan accounted for 1.4% of GDP and 8.6% of total government revenue; this latter ratio is much lower than the average in the CIS (Commonwealth of Independent States) countries (17%) (OECD 2020).

  12. Since 2020, the Bureau of National Statistics (hereafter, BNS-K) is part of the Agency for Strategic planning and reforms of the Republic of Kazakhstan.

  13. According to data published by BNS-K (2021), the percentage of total income of the top decile would have been significantly lower than those estimated by WID: 23.32% in 2016, 23.99% in 2017 and 24.32% in 2018.

  14. The national analytical centre in the field of education (Information-Analytic Centre), established at the initiative of the Ministry of Education, estimated that in 2017 the effectiveness of education was low in eight of the country's regions and medium in the other seven (IAC 2018).

  15. According to the cited report by a civic organisation, education and health are among the areas where corruption is most prevalent, after law enforcement and the courts.

  16. The other five republics are Belarus, Bulgaria, Moldova, Georgia and Ukraine.

  17. Complicated bureaucracy in accessing anti-poverty social benefits, as well as poor information for potential beneficiaries, has been identified as barriers to accessing these benefits (Scott et al. 2017).

  18. In 2017, only 18.2% of the poorest quintile of rural households and 17.3% of urban households received social assistance cash transfers (ASPIRE/Atlas of Social Protection Indicators of Resilience and Equity, World Bank).

  19. Among others, the 2020 Covid19 temporary relief measures meant aid to household consumption (food and non-food), partial salary compensation for workers having lost their job, employment in public works and 10% increase in pensions and other benefits.

  20. For various reasons (workers on unpaid leave, self-employed, informal workers, etc.), the additional beneficiaries of the 2020 monthly payments were not entitled to unemployment benefits.

References

  • Abenova M, Myssayev A, Kanya L, Aldyngurov D (2021) Analysis of maternal and infant health indicators in Kazakhstan: 2003–2018. Macedonian Journal of Medical Sciences 9(E):1133–1139. https://doi.org/10.3889/oamjms.2021.7042

    Article  Google Scholar 

  • Akhmetov A (2017) Testing the Presence of the Dutch Disease in Kazakhstan, MPRA Munich

  • Aliev T (2015) Poverty in Kazakhstan. World Economy and International Relations 59(12):105–115. https://doi.org/10.20542/0131-2227-2015-59-12-105-115

    Article  Google Scholar 

  • AllahMorad S, Mackie C (2021) The education system of Kazakhstan, WENR, https://wenr.wes.org/2021/07/education-in-kazakhstan

  • Anderson K, Capannelli G, Ginting E, Taniguchi K (eds) (2018) Asian Development Bank, Manila

  • ASPIRE. https://www.worldbank.org/en/data/datatopics/aspire/country/kazakhstan

  • Auty R (1994) Industrial policy reform in six newly industrializing countries: the resource curse thesis. World Dev 22(1):11–26. https://doi.org/10.1007/978-1-349-13460-1_4

    Article  Google Scholar 

  • Balazs E, Leonard CS (2006) The Dutch Disease in Kazakhstan: An Empirical Investigation. Focus on European Economic Integration 2(06):85–108

    Google Scholar 

  • Baldakhov U, Heim I (2020) Institutional Reform in Kazakhstan. In: Heim I (ed) Kazakhstan’s Diversification from the Natural Resources. Sector Strategic and Economic Opportunities. Palgrave Macmillan, London, pp 3–30. https://doi.org/10.1007/978-3-030-37389-4

    Chapter  Google Scholar 

  • Bayramov V, Orujova L (2017) (2017) Volatility, Diversification and Oil Shock in Resource-Rich Turkic Countries: Avenues for Recovery. Bilig 83:303–329

    Google Scholar 

  • Berstembayeva R, Niyazbekova SU, Kaldenova GS (2021) Evaluation of Poverty and Measures to Reduce It. In: Popkova EG, Sergi BS (eds) Smart Technologies for Society. Springer, Berlin, pp 99–106. https://doi.org/10.1007/978-3-030-59126-7

    Chapter  Google Scholar 

  • BNS-K (2021) Bureau of National statistics of the Agency for Strategic planning and reforms of the Republic of Kazakhstan (2021), Living standards in Kazakhstan 2016–2020, Statistical compilation https://www.gov.kz/memleket/entities/stat/documents

  • BNS-K (2022) Indicators of standard of living of population

  • BTI/Bertelsmann Transformation Index (2018). Kazakhstan Country Report. Bertelsmann Stiftung. https://bti-project.org/en/reports/country-dashboard/KAZ

  • Bulte EH, Damania R, Deacon RT (2005) Resource intensity institutions and development. World Dev 33(7):1029–1044. https://doi.org/10.1016/j.worlddev.2005.04.004

    Article  Google Scholar 

  • Busse M, Gröning S (2013) The resource curse revisited: governance and natural resources. Public Choice 154(1/2):1–20

    Article  Google Scholar 

  • Carmignani F (2013) Development outcomes, resource abundance, and the transmission through inequality. Resource and Energy Economics 35(3):412–428. https://doi.org/10.1016/j.reseneeco.2013.04.007

    Article  Google Scholar 

  • Carraro L, Rogers J, Rijicova S (2017) Technical support to improve design of targeted cash transfer program to be more responsive to the needs of families with children, UNICEF-Kazakstan, Final Report

  • Chandy L, Seidel B (2017) How much do we really know about inequality within countries around the world? Adjusting Gini coefficients for missing top incomes, Brookings

  • Civic Foundation Transparency Kazakhstan (2018). Report on the prevention of corruption in Kazakhstan

  • Cockx L, Francken N (2014) Extending the Concept of the Resource Curse: Natural Resources and Public Spending on Health, IOB Working Papers, no 2014.01, Universiteit Antwerpen

  • Cockx L, Francken N (2016) Natural resources: a curse on education spending? Energy Pol 92:394–408. https://doi.org/10.1016/j.enpol.2016.02.027

    Article  Google Scholar 

  • Crivelli E, Gupta S (2014) Resource Blessing, Revenue Curse? Domestic Revenue Effort in Resource-Rich Countries, IMF Working Paper 14/5

  • Darvas Z (2021) Timely measurement of real effective exchange rates, Working Paper 2021/15, Bruegel

  • Davis G (2009) Extractive economies, growth, and the poor. In: Richards JP (ed) Mining, society, and a sustainable World. Springer Verlag, Berlin, pp 37–60. https://doi.org/10.1007/978-3-642-01103-0_2

    Chapter  Google Scholar 

  • Davletova I, Makhazhan I (2020) Evaluating the Cost-Effectiveness of Conditional Targeted Social Assistance Program in Kazakhstan, Nazarbayev University Graduate School of Public Policy, Nur-Sultan. http://nur.nu.edu.kz/handle/123456789/4766

  • Dialga I, Ouoba Y (2022) How do extractive resources affect human development? Evidence from a panel data analysis. Resources. Environment and Sustainability 7:100046. https://doi.org/10.1016/j.resenv.2022.100046

    Article  Google Scholar 

  • EBRD/European Bank for Reconstruction and Development (2017). Kazakhstan diagnostic paper: Assessing progress and challenges in developing sustainable market economy

  • EBRD & PwC (2018) The fiscal implications for Kazakhstan of worldwide transition to a greener global economy 2018

  • Furstenberg S (2018) State responses to reputational concerns: the case of the extractive industries transparency initiative in Kazakhstan. Central Asian Survey 37(2):286–304. https://doi.org/10.1080/02634937.2018.1428789

    Article  Google Scholar 

  • Gamu J, Le Billon P, Spiegel S (2015) Extractive industries and poverty: a review of recent findings and linkage mechanisms. Extr Ind Soc 2(1):162–176. https://doi.org/10.1016/j.exis.2014.11.001

    Article  Google Scholar 

  • Gylfason T (2001) Natural resources, education, and economic development. Eur Econ Rev 45(4–6):847–859. https://doi.org/10.1016/S0014-2921(01)00127-1

    Article  Google Scholar 

  • Hirschman AO (1958) The strategy of economic development. Yale University Press, New Haven. https://doi.org/10.2307/1235188

    Book  Google Scholar 

  • Hirschman AO (1977) A generalized linkage approach to development, with special reference to staples. Econ Dev Cult Change 25:67–98. https://doi.org/10.1515/9781400848409-008

    Article  Google Scholar 

  • Hirschman AO (1981) Essays ín trespassíng: economícs to polítícs and beyond. Cambridge University Press, Cambridge

    Google Scholar 

  • IAC/Information-Analytic Center (2018). Education system statistics in Republic of Kazakhstan, National Report. https://iac.kz/en

  • Ibadildin N (2019) The resource curse, petropolitics and institutional development. Kimep University, Almaty

    Google Scholar 

  • Ibadıldın N, Torjesen S, Krıstıansen SO (2020) Linkage strategies and political choices for an authoritarian country in transition: the case of Kazakhstan. Eurasian Research Journal 2(1):61–80

    Google Scholar 

  • ILO/International Labour Organization (2021). World Social Protection Report 2020–22: Social protection at the crossroads ‒ in pursuit of a better future, Geneva

  • ILOSTAT Statistics. https://ilostat.ilo.org

  • IEA/International Energy Agency (2021). Kazakhstan Energy Profile

  • IMF/International Monetary Fund (2013). Leveraging Oil Wealth for Development in Kazakhstan: Opportunities and Challenges. CR 13/291

  • IMF/International Monetary Fund (2018). Key elements of the new regime of natural resource taxation, Republic of Kazakhstan : Art IV Report, CR 18/278, Selected Issues

  • IMF/International Monetary Fund (2020). Improving progressivity and efficiency: a review of the personal income tax and other taxes on labor in Kazakhstan, Art IV Report, CR 20/38, Selected Issues

  • IMF/International Monetary Fund (2022). 2022 Art IV Consultation Staff Report, CR 22/367

  • Kalyuzhnova Y, Belitski M (2019) The Impact of Corruption and Local Content Policy in on Firm Performance: Evidence from Kazakhstan. Resour Policy 61:67–76. https://doi.org/10.1016/j.resourpol.2019.01.016

    Article  Google Scholar 

  • Kerimray A, De Miglio R, Rojas-Solórzano L, Gallachóir BPÓ, B.P. (2018) Causes of energy poverty in a cold and resource-rich country: evidence from Kazakhstan. The International Journal of Justice and Sustainability. https://doi.org/10.1080/13549839.2017.1397613

    Article  Google Scholar 

  • Khamzina ZA, Buribayev YA, Oryntayev ZK, Kuttygalieva A (2015) Problems of Overcoming Poverty in the Republic of Kazakhstan. Mediterr J Soc Sci 6(35):168–176. https://doi.org/10.5901/mjss.2015.v6n3s5p169

    Article  Google Scholar 

  • Kopeyeva A (2020) Understanding Factors behind Regional Inequality in Education in Kazakhstan. Central Asian Affairs 7(1):38–79. https://doi.org/10.30965/22142290-00701002

    Article  Google Scholar 

  • Kudebayeva A (2018) Chronic Poverty in Kazakhstan. CERGE-Prague, Prague

    Book  Google Scholar 

  • Kudaibergenova DT, Laruelle M (2022) Making sense of the January 2022 protests in Kazakhstan: failing legitimacy, culture of protests, and elite readjustments. Post-Soviet Affairs. https://doi.org/10.1080/1060586X.2022.2077060

    Article  Google Scholar 

  • Mahdavi P (2020) Institutions and the “resource Curse”: Evidence From Cases of Oil-Related Bribery. Comp Pol Stud 53(1):3–39

    Article  Google Scholar 

  • Manley D (2017). Ninth Time Lucky: Is Zambia’s Mining Tax the Best Approach to an Uncertain Future?, Natural Resources Governance Institute

  • Manley D (2018). An Economic Evaluation of Gold Mining Tax Regimes in the Kyrgyz Republic, Natural Resources Governance Institute

  • Mansour M, Świstak A (2017) Tax competition and coordination in extractive industries. In: Daniel Ph, Keen M, Świstak A, Thuronyi V (eds) International Taxation and the Extractive Industries. Routledge, pp 332–358

    Google Scholar 

  • Mawejje J, Sebudde R (2019) Tax revenue potential and effort: worldwide estimates using a new dataset. Economic Analysis and Policy 63:119–129. https://doi.org/10.1016/j.eap.2019.05.005

    Article  Google Scholar 

  • Morris M, Kaplinski R, Kaplan D (2012) One Thing Leads to Another. Promoting lndustrialization by Making the Most of the Commodity Boom in Sub-Saharan Africa. University of Cape Town

  • Nurseiit NA, Charman K (2018) Selection of the optimal way of development for the oil dependent economy of Kazakhstan. Eurasian Journal of Economics and Finance 6(1):25–34. https://doi.org/10.15604/ejef.2018.06.01.003

    Article  Google Scholar 

  • OECD (2016). Multi-dimensional Review of Kazakhstan, volume 1 : Initial Assessment, Paris. https://doi.org/10.1787/9789264246768-en

  • OECD (2017). Multi-dimensional Review of Kazakhstan, volume 2 : In-depth Analysis and Recommendations, Paris. https://doi.org/10.1787/9789264269200-en

  • OECD (2018a). OECD Reviews of Health Systems: Kazakhstan, Paris. https://doi.org/10.1787/9789264289062-en

  • OECD (2018b). Reforming Kazakhstan: Progress, Challenges and Opportunities, Paris

  • OECD (2020). Tax Policy Reviews: Kazakhstan, Paris. https://doi.org/10.1787/872d016c-en

  • OECD/UNICEF (2021). Education in Eastern Europe and Central Asia: Findings from PISA, OECD Publishing, Paris. https://doi.org/10.1787/ebeeb179-en

  • Oka N (2019) Grades and Degrees for Sale: Understanding Informal Exchanges in Kazakhstan’s Education Sector. Problems of Post-Communism 66(5):329–341

    Article  Google Scholar 

  • Ostrowski W (2013) The political economy of global resources. In: Dannreuther R, Ostrowski W (eds) Global Resources. Palgrave Macmillan, pp 98–115

    Chapter  Google Scholar 

  • Panzabekova A, Satybaldin A, Alibekova G, Abilkayir N (2019) Human capital for sustainable development: a comparative analysis of regions of the Republic of Kazakhstan. IOP Conference Series: Earth and Environmental Science 317:012013

    Google Scholar 

  • Rakymzhanova S, Issakhova PB, Karshalova A (2018) Development of the social protection funding mechanisms in the Republic of Kazakhstan. Revista Espacios 39(27):31

    Google Scholar 

  • Rau G, Kurmanov B (2015) The fall of the tenge. A critical analysis of the official narrative on the Kazakhstani currency devaluation, Central Asia Economic Papers no. 17

  • Rodríguez-Pose A, Bartalucci F (2021) Regional Inequality Study for Kazakhstan. Asian Development Bank, Manila

    Google Scholar 

  • Rodrik D (2004) Industrial Policy for the Twenty-First Century, CEPR Discussion Paper no. 4767. https://econpapers.repec.org/RePEc:cpr:ceprdp:4767

  • Ross ML (2001) Does Oil Hinder Democracy ? World Politics 53(3):325–361. https://doi.org/10.1353/wp.2001.0011

    Article  Google Scholar 

  • Ross ML (2003) How Does Mineral Wealth Affect the Poor?, UCLA, Dep. of Political Science.

  • Sabirov B, Shakulikova G (2020) Diversification and Local Industry Development, In: Heim, I. (Eds.), op cit. , 205–226, Palgrave Macmillan

  • Sachs JD, Warner AM (1995) Natural resource abundance and economic growth, NBER, Working Papers, nr 5398

  • Sadyrova M, Yusupov K, Imanbekova B (2021) Innovation processes in Kazakhstan: development factors. Journal of Innovation and Entrepreneurship 10:36

    Article  Google Scholar 

  • Sanghera B, Satybaldieva E (2020) The Other Road to Serfdom: the Rise of the Rentier Class in Post-Soviet Economies. Soc Sci Inf 59(3):505–536

    Article  Google Scholar 

  • Scott L, Sturge G, Babajanian B (2017) Barriers to access social assistance in Kazakhstan, UNICEF

  • Spankulova L, Karatayev M, Clarke ML (2020) Trends in Socioeconomic Health Inequalities in Kazakhstan: National Household Surveys Analysis. Communis Post-Commun 53(2):177–190. https://doi.org/10.1525/cpcs.2020.53.2.177

    Article  Google Scholar 

  • UIS-UNESCO Institute for Statistics (2023). http://uis.unesco.org

  • UNDP/United Nations Development Programme (2022). Human Development Report 2021–2022

  • UNICEF (2015). Analysis of social transfers for children and their families in Kazakhstan.

  • WID/World Inequality Database (2022). https://wid.world/es/series/

  • WDI/World Development Indicators, World Bank (2022). https://data.worldbank.org/indicator/

  • World Bank (2017) Kazakhstan enhancing the fiscal framework to support economic transformation, public finance review, November 2017

  • World Bank (2018). Kazakhstan: Reversing Productivity Stagnation. Country Economic Memorandum

  • WHO/World Health Organisation, database (2023). https://www.who.int/data/collections/.

  • World Inequality Database on Education (WIDE) (2021). https://www.education-inequalities.org/

Download references

Funding

No funds, grants, or other support was received.

Author information

Authors and Affiliations

  1. ECA-Brussels, Belgium

    Rafael Aguirre-Unceta

Authors
  1. Rafael Aguirre-Unceta
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rafael Aguirre-Unceta.

Ethics declarations

Conflict of interest

The author has no conflicts of interest to declare that are relevant to the content of this article.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Aguirre-Unceta, R. Kazakhstan: extractive resources, governance and inclusive development. J. Soc. Econ. Dev. 26, 235–257 (2024). https://doi.org/10.1007/s40847-023-00252-1

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40847-023-00252-1

Keywords

JEL Classification

Search

Navigation