The Development of Successful Economic Technologies Over 30 Years of Independence

Over the thirty years of Independence, Kazakhstan has developed its own unique economic experience. Speakers at the scientific conference dedicated to discussing the collection of articles “Post-Soviet and World Modernization: 30 Years of Results” evaluated the history of the formation of independent Kazakhstan as “one of the main success stories in the post-Soviet space.” GDP per capita in Kazakhstan has grown nearly threefold, reaching record highs for countries in Central Asia and even Russia. Below, we will share the most important information about the technologies that enabled Kazakhstan to achieve its success.

Where did it all begin?

Initially, most post-Soviet countries were predicted to face stagnation. It was expected that they would fall into the so-called “poverty trap” and would never recover after the collapse of the Soviet Union. Kazakhstan faced some of the most unfavorable conditions: it lacked access to global markets, the level of wear and tear on its main technological assets exceeded 40%, and Kazakh enterprises were merely parts of the cooperative systems of other union republics, unable to function independently.

The economy simply could not be built on the familiar agrarian system. It was at this time that Kazakhstan chose the correct strategy of orienting itself toward global, rather than Soviet, practices. Moreover, these technologies were not accepted unconditionally but were carefully adapted to the country’s specifics and context. For example, we do not have a single state-owned bank, which is unique in itself. However, Kazakhstan’s pension model is based on the Chilean model, which ensures the transition from a solidarity-based system to a mixed contributory system.

The Success Formula

A multi-vector economy was the first correct decision on the path to an Independent Kazakhstan. Next came the readiness to transition to long-term planning. For instance, our first strategy was introduced as early as 1997, even before Russia’s, and was aimed at a 30-year horizon.

Other key points include attention to macroeconomics and macrofinance. The establishment of effective development institutions ensured Kazakhstan sustained economic growth for many years ahead. The global goal of reforms is the creation of an antifragile state.

Furthermore, Kazakhstan adopted the model of a free-floating exchange rate, while Russia “has much to learn.” According to global rankings, Russia ranks 93rd in the Index of Economic Freedom, while Kazakhstan ranks 34th.

The Significance of Financial Institutions

To a large extent, Kazakhstan’s economic successes are underpinned by financial institutions. For example, the International Financial Center “Astana” (IFC “Astana”) has already attracted over 1,000 companies. The center has become a sort of “gateway” for international investors into Central Asia and has proven much more successful than similar initiatives in other countries. This is largely due to the willingness to use the English legal system for communication with foreign partners. Here, the Head of IFC “Astana,” Kairat Kelimbetov, cited the successful experiences of countries such as Hong Kong, Singapore, Dubai, etc. Investors were more willing to enter into economic relations using a legal language they understood.

Solving Privatization Problems

In the 1990s, Kazakhstan chose an unusual approach to privatization. Instead of monopolizing enterprises in state hands, it willingly turned to foreign investors, conducting a sort of depoliticization. This decision ensured sustained growth in GDP per capita.

Following the examples of Singapore and Malaysia, Kazakhstan decided to consolidate shares in the capital of state-owned companies into a special investment fund (similar to Russia’s National Wealth Fund). Thanks to this, the consequences of the crises in 2008–2009 and 2014–2015 were mitigated with fewer losses.

Directions for Future Activity

Interestingly, after building successful financial models, Kazakhstan chose to focus its next development stage on improving technological processes within the country. Kairat Kelimbetov emphasized the need to catch the “train of global technological progress” and highlighted the creation of an entire national project, “Technological Leap,” to achieve these goals.

Important areas include the development of solar and wind energy technologies, with consideration given to opening a nuclear power plant and other high-tech solutions for one of Kazakhstan’s main tasks—decarbonization. A rapid departure from coal energy is impossible without creating reliable alternatives, otherwise, there could be a sharp spike in tariffs.

Finally, efforts are underway to strengthen and develop a common market for the entire post-Soviet space. This is important because currently, only 60 million people live in the four post-Soviet Central Asian countries, but their population is projected to increase to 100 million by 2040.

“First of all, it is the speeding train of global technological progress,” Kairat Kelimbetov lists. “We want to get on this train, and for that, it is important to support domestic science and the education system… Kazakhstan has a national project called ‘Technological Leap through Digitalization in Science and Innovation.’ In this direction, we plan to work with our Russian colleagues to achieve success together.”

The second major challenge is widespread decarbonization. Essentially, the business model is changing, which currently in both Russia and Kazakhstan is based on oil. It is enough to say that our main export goods go to the EU, and the European Union will apply cross-border regulations. In other words, we are facing a change in the rules of the game. Anticipating this, Kazakhstan has decided to achieve full carbon neutrality by 2060. Here, we are closer to the models of China and India—a model of gradual transition, because a sudden departure from coal means rising electricity tariffs, social vulnerability of the population, and costs for industry.

In Kazakhstan, as the expert explained, they are also considering the creation of a common market within the post-Soviet space.

“Integration processes are very important to us,” Kairat Kelimbetov explained the idea. “And now we are building such a small common market in Central Asia. Today, 60 million people live in the four post-Soviet Central Asian countries, and by 2040, according to expert forecasts, there will be 100 million residents here.”