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Kazakhstan's cotton sector reforms since independence
[Die Reformen des kasachstanischen Baumwollsektors seit der Unabhängigkeit]

Author

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  • Oshakbayev, Dauren
  • Taitukova, Regina
  • Petrick, Martin
  • Djanibekov, Nodir

Abstract

With the goal of reducing the dependency on oil revenues, the Government of Kazakhstan has recently increased its budget allocations to prop up the domestic agricultural sector. Yet, many observers agree that it is less the amount of public spending that induces long-term growth than the quality of the regulatory environment. Against this background, the current paper analyses the nature and effects of state regulation in the cotton sector. In the early 2000s, it was considered to be the only example of private vertical coordination in Kazakhstani agriculture, which contrasted sharply with the state mandates imposed on producers in Uzbekistan and Turkmenistan. However, in 2007, regulation in Kazakhstan forced ginneries to use a complex warehouse receipt system without making sure that it was accepted by stakeholders and without appropriate institutions for implementing it in place. At the same time, it imposed financing restrictions on ginneries, which were major loan and input providers to farmers. Further measures included the establishment of a special economic zone to host a "cotton cluster". In the following years, private producers and investors turned away from cotton, and cotton area and output fell substantially. We argue that the cotton sector performance after 2007 shows how ill-designed regulation and government interference can turn a promising economic sector into decline. As an unintended side effect, the regulation promoted more diversified crop rotations based on high value crops.

Suggested Citation

  • Oshakbayev, Dauren & Taitukova, Regina & Petrick, Martin & Djanibekov, Nodir, 2018. "Kazakhstan's cotton sector reforms since independence
    [Die Reformen des kasachstanischen Baumwollsektors seit der Unabhängigkeit]
    ," IAMO Discussion Papers 172, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
  • Handle: RePEc:zbw:iamodp:172
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    1. repec:zbw:iamodp:158730 is not listed on IDEAS
    2. Wladyslaw Jermakowicz & Piotr Kozarzewski & Julian Pankow, 1996. "Privatization in the Republic of Kazakhstan," CASE Network Studies and Analyses 0085, CASE-Center for Social and Economic Research.
    3. Petrick, Martin & Wandel, Jürgen & Karsten, Katharina, 2011. "Farm restructuring and agricultural recovery in Kazakhstan's grain region: An update," IAMO Discussion Papers 137, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
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    More about this item

    Keywords

    cotton; Kazakhstan; public regulation; commodity finance; Baumwolle; Kasachstan; staatliche Regulierung; Rohstofffinanzierung;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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