Kazakhstan

Green economy

Kazakhstan launched the Green Economy Plan in 2013. It committed Kazakhstan to meet 50% of its energy needs from alternative and renewable sources by 2050.[184] The green economy was projected to increase GDP by 3% and create some 500,000 jobs.[185] The government set prices for energy produced from renewable sources. The price of 1 kilowatt-hour for energy produced by wind power plants was set at 22.68 tenge ($0.12), for 1 kilowatt-hour produced by small hydro-power plants 16.71 tenge ($0.09), and from biogas plants 32.23 tenge ($0.18).[186]

Foreign direct investment

Kazakhstan has attracted $330 billion in foreign direct investment (FDI) from more than 120 countries since its independence.[187] In 2015, the U.S. State Department said Kazakhstan was widely considered to have the best investment climate in the region.[188] In 2014, President Nazarbayev signed into law tax concessions to promote foreign direct investment which included a 10-year exemption from corporation tax, an eight-year exemption from property tax, and a 10-year freeze on most other taxes.[189] Other incentives include a refund on capital investments of up to 30 percent once a production facility is in operation.[189]

In 2014, the European Bank of Reconstruction and Development (EBRD) and Kazakhstan created the artnership for Re-Energizing the Reform Process in Kazakhstan to work with international financial institutions to channel US$2.7 billion provided by the Kazakh government into important sectors of Kazakhstan's economy.[190]

As of May 2014, Kazakhstan had attracted $190 billion in gross foreign investments since its independence in 1991 and it led the CIS countries in terms of FDI attracted per capita.[191] One of the factors that attract foreign direct investments is country's political stability.

The OECD 2017 Investment Policy Review noted that "great strides" had been made to open up opportunities to foreign investors and improving policy to attract FDI.[192]

Banking

The banking industry of Kazakhstan went through a boom-and-bust cycle in the early 21st century. After several years of rapid expansion in the mid-2000s, the banking industry collapsed in 2008. Several large banking groups, including BTA Bank J.S.C. and Alliance Bank, defaulted soon thereafter. The industry shrank and was restructured, with system-wide loans dropping from 59% of GDP in 2007 to 39% in 2011. Although the Russian and Kazakhstani banking systems share some common features, there are key differences: Banks in Kazakhstan experienced a lengthy period of political stability and economic growth, which helped push Kazakhstan's banking system to a higher level of development. Banking technology and personnel qualifications were stronger in Kazakhstan. On the negative side, past stability in Kazakhstan arose from the concentration of virtually all political power in the hands of a single individual – the key factor in any assessment of system or country risk.[193]

Bond market

In October 2014, Kazakhstan introduced its first overseas dollar bonds in 14 years.[194] Kazakhstan issued $2.5 billion of 10- and 30-year bonds on 5 October 2014, in what was the nation's first dollar-denominated overseas sale since 2000.[194] Kazakhstan sold $1.5 billion of 10-year dollar bonds to yield 1.5 percentage points above midswaps and $1 billion of 30-year debt at two percentage points over midswaps.[194] The country drew bids for $11 billion.[194]

Housing market

The housing market of Kazakhstan grew after 2010. In 2013, the total housing area in Kazakhstan amounted to 336.1 million square metres (3,618 million square feet). Urban areas contained 62.5 percent of the country's housing stock. The housing stock rose over the year to 32.7 million sq. ft., nearly an 11% increase. Between 2012 and 2013, the living area per Kazakh citizen rose from 19.6 to 20.9 square metres (211 to 225 square feet).
The UN's recommended standard for housing stands at 30 square metres (320 square feet) per person. Kazakhstan was projected to reach the UN standards by 2019 or 2020.[195]

"Nurly Jol" economic policy

On 11 November 2014, President of Kazakhstan Nursultan Nazarbayev delivered an unexpected state-of-the-nation address in Nur-Sultan at an extended session of the Political Council of the Nur Otan party, introducing a "Nurly Jol" (Bright Path), a new economic policy that implies massive state investment in infrastructure over the next several years.[196] The "Nurly Zhol" policy is accepted as preventive measures needed to help steer the economy towards sustainable growth in the context of the modern global economic and geopolitical challenges, such as the 25%-reduction in the oil price, reciprocal sanctions between the West and Russia over Ukraine, etc.[196] The policy embraces all aspects of economic growth, including finances, industry and social welfare, but especially emphasises investments into the development of infrastructure and construction works.[196] Given recent decreases in revenues from the export of raw materials, funds will be used from Kazakhstan's National Fund.[196]

Economic competitiveness

In the 2020 Doing Business Report by the World Bank, Kazakhstan ranked 25th globally and as the number one best country globally for protecting minority investors’ rights.[197] Kazakhstan achieved its goal of entering the top 50 most competitive countries in 2013, and has maintained its position in the 2014–2015 World Economic Forum Global Competitiveness Report that was published at the beginning of September 2014.[198] Kazakhstan is ahead of other states in the CIS in almost all of the report's pillars of competitiveness, including institutions, infrastructure, macroeconomic environment, higher education and training, goods market efficiency, labour market development, financial market development, technological readiness, market size, business sophistication and innovation, lagging behind only in the category of health and primary education.[198] The Global Competitiveness Index gives a score from 1 to 7 in each of these pillars, and Kazakhstan earned an overall score of 4.4.[198]

Corruption

In 2005, the World Bank listed Kazakhstan as a corruption hotspot, on a par with Angola, Bolivia, Kenya, Libya and Pakistan.[199] In 2012, Kazakhstan ranked low in an index of the least corrupt countries[200] and the World Economic Forum listed corruption as the biggest problem in doing business in the country.[200]
A 2017 OECD report on Kazakhstan indicated that Kazakhstan has reformed laws with regard to the civil service, judiciary, instruments to prevent corruption, access to information, and prosecuting corruption.[201] Kazakhstan has implemented anticorruption reforms that have been recognised by organizations like Transparency International.[202]

In 2011 Switzerland confiscated US$48 million in Kazakhstani assets from Swiss bank accounts, as a result of a bribery investigation in the United States.[203] US officials believed the funds represented bribes paid by American officials to Kazakhstani officials in exchange for oil or prospecting rights in Kazakhstan. Proceedings eventually involved US$84 million in the US and another US$60 million in Switzerland.[203]

The Federal Bureau of Investigation and the Kazakh Anti-Corruption Agency signed a Mutual Legal Assistance Treaty in February 2015.[204]

Science and technology

Research remains largely concentrated in Kazakhstan's largest city and former capital, Almaty, home to 52% of research personnel. Public research is largely confined to institutes, with universities making only a token contribution. Research institutes receive their funding from national research councils under the umbrella of the Ministry of Education and Science. Their output, however, tends to be disconnected from market needs. In the business sector, few industrial enterprises conduct research themselves.[205][206]

One of the most ambitious targets of the State Programme for Accelerated Industrial and Innovative Development adopted in 2010 is to raise the country's level of expenditure on research and development to 1% of GDP by 2015. By 2013, this ratio stood at 0.18% of GDP. It will be difficult to reach the target as long as economic growth remains strong.[needs update] Since 2005, the economy has grown faster (by 6% in 2013) than gross domestic expenditure on research and development, which only progressed from PPP$598 million to PPP$714 million between 2005 and 2013.[206]

Innovation expenditure more than doubled in Kazakhstan between 2010 and 2011, representing KZT 235 billion (circa US$1.6 billion), or around 1.1% of GDP. Some 11% of the total was spent on research and development. This compares with about 40–70% of innovation expenditure in developed countries. This augmentation was due to a sharp rise in product design and the introduction of new services and production methods over this period, to the detriment of the acquisition of machinery and equipment, which has traditionally made up the bulk of Kazakhstan's innovation expenditure. Training costs represented just 2% of innovation expenditure, a much lower share than in developed countries.[205][206] Kazakhstan was ranked 79th in the Global Innovation Index in 2021.[207]

In December 2012, President Nursultan Nazarbayev announced the Kazakhstan 2050 Strategy with the slogan "Strong Business, Strong State." This pragmatic strategy proposes sweeping socio-economic and political reforms to hoist Kazakhstan among the top 30 economies by 2050. In this document, Kazakhstan gives itself 15 years to evolve into a knowledge economy. New sectors are to be created during each five-year plan. The first of these, covering the years 2010–2014, focused on developing industrial capacity in car manufacturing, aircraft engineering and the production of locomotives, passenger and cargo railroad cars. During the second five-year plan to 2019, the goal is to develop export markets for these products. To enable Kazakhstan to enter the world market of geological exploration, the country intends to increase the efficiency of traditional extractive sectors such as oil and gas. It also intends to develop rare earth metals, given their importance for electronics, laser technology, communication and medical equipment. The second five-year plan coincides with the development of the Business 2020 roadmap for small and medium-sized enterprises (SMEs), which makes provision for the allocation of grants to SMEs in the regions and for microcredit. The government and the National Chamber of Entrepreneurs also plan to develop an effective mechanism to help start-ups.[206]