Issues with Diversity: Kazakhstan’s Economy and Oil

Another student guest blog on one of the Central Asian Republics, and one of my favorites of the Republics at that! This one covers oil-rich Kazakhstan, and in addition to a picture from a news story that the student found, I’m adding one of my own pictures from my time doing fieldwork in the region.


Since their independence in 1991, Kazakhstan has continued to try to replace their Soviet past with a new, progressive economy. In 2002, the country was recognized by the U.S. as a free market economy, the first of all the Post-Soviet states, and has a bid to join WTO (the World Trade Organization) in 2013.

Picture taken in Almaty's Green Market.  You can seriously buy anything there.
Picture taken in Almaty’s famous Green Market. Seriously, you can buy ANYTHING there.

Like many of the other countries bordering the Caspian Sea, Kazakhstan is driven by oil. In 2010 alone, Kazakhstan exported nearly US$25 trillion worth of petroleum (US$24,068,239,338.59 to be exact, which is just over 60% of their economy). Oil, however, has led to a not so diversified economy with smaller exports of minerals and radioactive elements (such as Uranium ore and coal) and metals (mainly copper alloys), agricultural goods. According to a CIA profile of the state, agriculture, although only making up 5% of the Kazakhstani GDP, employs approximately 25% of the work force.

According to the World Bank, Kazakhstan has an upper-middle class income with a GDP per capita of US$11,245 in 2011. Since the 2009 oil crisis, the nation’s growth rate has been on the road to recovery. During this time, the growth rate plummeted to 1.2%, but saw a quick turn around with a growth rate of 7.3% and 7.5% in 2010 and 2011 respectively. Despite the crisis, Kazakhstan has had a steady increase in GDP (PPP) since 1999.

December 2011: Striking oil workers launch anti-government protests in Zhanaozen.
Read the full article at http://www.rferl.org/content/kazakhstan-to-wipe-zhanaozen-off-the-map/24757630.html

Even with the outbreaks of violence, which led 17 workers to be killed, President Nursultan Nazarbayev and his Nur Otan party have managed to win yet another election. The legitimacy of this election in questionable, considering Zhanaozen (the town where the protests took place) was excluded from the vote because it was placed in a “state of emergency” for an additional 4 weeks (and by then, the elections were over).

The future of Kazakhstan’s economy is a double edged sword. Due to the excess amount of oil in the Kazakhstani economy (as mentioned above), the possibility it will succumb to the “Dutch disease.” To combat this issue, Kazakhstan is looking to invest in the mining industry in order to diversify their economy. only time will tell whether the transitions will work or not.

References

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