Kazakhstan could diversify its economy
and attract more FDI into its non-extractive
sectors by taking a sectoral approach to
The strong GDP growth in Kazakhstan over the last decade has been driven largely by the performance of the country’s natural resource sectors, with its economic activity and investment concentrated in the hydrocarbon and mining industries. While FDI inflows into Kazakhstan are significant (USD 19.9 billion in 2011) and growing (e.g. annual growth rate of 20% between 2004 and 2011), 75% of FDI is concentrated in the oil and gas and related sectors. To prevent long-term economic dependence on natural resources, one of the long-term strategic goals of the Kazakhstani government is to promote economic diversification as well as further GDP and employment growth by encouraging FDI.
Governments can attract more and better FDI both by improving the overall investment environment,1 but also through targeted policies to promote specific sectors. These approaches are complementary. This handbook focuses on how to attract FDI at the sector level.
The OECD (Organisation for Economic Co-operation and Development) Eurasia Competitiveness Programme has been supporting the Government of Kazakhstan to diversify its economy through its Sector Competitiveness Strategy project since 2009. This handbook is the final deliverable of the second phase of the project and includes recommendations to overcome policy barriers to access finance, particularly in the agribusiness sector. It builds on Phase I of the project, which identified improved access to finance as a priority for enhancing competitiveness in Kazakhstan.
Since the inception of this project, the OECD has involved the Government of Kazakhstan, international and local private sector companies, business associations, international organisations and civil society organisations, to identify the main policy barriers, prioritise the most relevant policy options, and design recommendations and an implementation plan.
The project is conducted in collaboration with the Government of Kazakhstan, including the ministry of Agriculture, and is co-financed by the European Union.
This handbook is the outcome of work conducted by the OECD Eurasia Competitiveness Programme under the authority of the Central Asia Initiative Steering Committee, in consultation with the Government of Kazakhstan and with participation of the private sector in Kazakhstan.
Representatives from the Prime Minister’s office, the Deputy Prime Minister’s office, several ministries, government agencies, private sector associations and private sector companies in Kazakhstan contributed to this report.