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The Economic Complexity of Kazakhstan: A Roadmap for Sustainable and Inclusive Growth

Author

Listed:
  • Clement Brenot

    (Center for International Development at Harvard University)

  • Douglas Barrios

    (Center for International Development at Harvard University)

  • Eric S. M. Protzer

    (Center for Global Development)

  • Nikita Taniparti

    (Center for International Development at Harvard University)

  • Ricardo Hausmann

    (Harvard's Growth Lab)

  • Sophia Henn

    (Center for International Development at Harvard University)

Abstract

Since the end of the 1990s, Kazakhstan has relied on oil and gas as the main drivers of economic growth. While this has led to rapid development of the country, especially during years of high oil prices, it has also subjected the economy to more severe downturns during oil shocks, bouts of currency overvaluation, and procyclicality in growth and public spending. Stronger economic diversification has the potential to drive a new era of sustainable growth by supporting new sources of value added and export revenue, creating new and better jobs, and making the economy more resistant to fluctuations in oil dynamics. However, repeated efforts to stimulate alternative, non-oil engines of growth have so far been inconclusive. This report introduces a new framework to identify opportunities for economic diversification in Kazakhstan. This framework attempts to improve upon previous methods, notably by building country and region-specific challenges to the development of the non-oil economy directly into the framework to identify feasible and attractive opportunities. These challenges are presented in detail in the Growth Diagnostic of Kazakhstan and are summarized along three high-level constraints: (i) an uneven economic playing field dominated by government-related public and private-entities; (ii) difficulties in acquiring productive capabilities, agglomerating them locally, and accessing export markets; and (iii) ongoing macroeconomic factors lowering external competitiveness lower and making the economy less stable. Our approach applies the economic complexity paradigm to identify what specific products and industries are most feasible for diversification, based on the existing productive capabilities demonstrated in the economy. We examine Kazakhstan's economic complexity at the national but also subnational levels, highlighting the heterogeneity of export baskets across regions that makes an analysis of opportunities at the subnational level essential.

Suggested Citation

  • Clement Brenot & Douglas Barrios & Eric S. M. Protzer & Nikita Taniparti & Ricardo Hausmann & Sophia Henn, 2023. "The Economic Complexity of Kazakhstan: A Roadmap for Sustainable and Inclusive Growth," CID Working Papers 426, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:426
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    File URL: https://growthlab.cid.harvard.edu/sites/projects.iq.harvard.edu/files/growthlab/files/2023-02-cid-wp-426-kazakhstan-complexity.pdf
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    References listed on IDEAS

    as
    1. Alibek Konkakov & Gulaikhan Kubayeva, 2016. "Progress in diversification of the economy in Kazakhstan," Working Papers 2016/8, Maastricht School of Management.
    2. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
    3. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    4. Ana Grisanti & Douglas Barrios & Eric S. M. Protzer & Jorge Tapia & Ricardo Hausmann & Semiray Kasoolu & Tim O'Brien & Rushabh Sanghvi & Nikita Taniparti, 2021. "Growth Perspective on Western Australia," CID Working Papers 393, Center for International Development at Harvard University.
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    Keywords

    Economic Complexity; Kazakhstan;

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