Kazakhstan Reversing Productivity Stagnation : Country Economic Memorandum
After experiencing exceptional economic growth in the 2000s, Kazakhstan’s economy has slowed sharply since the global financial crisis, putting development achievements at risk. The economic slowdown has been caused by sharply lower commodity price...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/615051550479498194/Kazakhstan-Reversing-Productivity-Stagnation-Country-Economic-Memorandum http://hdl.handle.net/10986/31348 |
| Summary: | After experiencing exceptional economic
growth in the 2000s, Kazakhstan’s economy has slowed sharply
since the global financial crisis, putting development
achievements at risk. The economic slowdown has been caused
by sharply lower commodity prices, and structural
degradation of the economy. Kazakhstan’s productivity growth
has steadily fallen over the past two decades. Falling
within-sector productivity improvements are the driving
force behind Kazakhstan’s productivity slowdown. The private
sector is significantly constrained and does not exhibit
many important features of healthy private sectors
worldwide. Empirical evidence suggests that business entry
rates are relatively low in Kazakhstan, even controlling for
the structure of economy. The evidence shows that new (and
small) firms are more productive than older (and larger)
firms. The corrosive patterns must be corrected to revive
productivity, which is essential for higher economic growth
- since higher investment cannot substitute for productivity
growth in the long run. The first policy imperative is to
level the playing field for all firms - well-connected or
otherwise. The second policy is to strengthen the rule of
law and to deal more aggressively and comprehensively with
corruption. Third, the governments will need to introduce
structural changes in the economy to boost private
investment and reduce a disproportionately large role of the
state in the economy. |
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