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An Institutional Risk Analysis of the Kazakh Economy

Author

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  • Oliver Röhn
  • Sultan Orazbayev
  • Aslan Sarinzhipov

Abstract

This paper investigates the impact of institutions or structural policies on the volatility of income or GDP per capita in transition countries and in Kazakhstan in particular. In the first part of the paper we compare Kazakhstan’s institutional framework with other transition economies based on a broad range of indicators. Using factor analytical tools to reduce the dimensionality of the indicator space we find that in general Kazakhstan’s institutional quality ranks among the lowest of the 24 transition countries investigated. Reform progress was mainly achieved in infrastructure. In the second part of the paper we employ state-of-the-art Bayesian Model Averaging (BMA) to identify institutional and macroeconomic policy areas that have the strongest impact on output volatility in transition economies. The analysis shows that good legal and administrative institutions can help smooth output volatility. Moreover, we also find that inflation and current account volatility and to a smaller extend exchange rate fluctuations are important determinants of output volatility.

Suggested Citation

  • Oliver Röhn & Sultan Orazbayev & Aslan Sarinzhipov, 2009. "An Institutional Risk Analysis of the Kazakh Economy," ifo Working Paper Series 70, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_70
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    File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-70.pdf
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    References listed on IDEAS

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    1. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
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    3. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
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    5. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    7. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    8. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    9. Thorsten Beck & Luc Laeven, 2006. "Institution building and growth in transition economies," Journal of Economic Growth, Springer, vol. 11(2), pages 157-186, June.
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    11. Malik, Adeel & Temple, Jonathan R.W., 2009. "The geography of output volatility," Journal of Development Economics, Elsevier, vol. 90(2), pages 163-178, November.
    12. Agenor, Pierre-Richard & McDermott, C John & Prasad, Eswar S, 2000. "Macroeconomic Fluctuations in Developing Countries: Some Stylized Facts," World Bank Economic Review, World Bank Group, vol. 14(2), pages 251-285, May.
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    Cited by:

    1. Balavac, Merima & Pugh, Geoff, 2016. "The link between trade openness, export diversification, institutions and output volatility in transition countries," Economic Systems, Elsevier, vol. 40(2), pages 273-287.

    More about this item

    Keywords

    Institutions; output volatility; development; transitions economies; model uncertainty; Bayesian Model Averaging;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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