*111260*
BERDYGULOVA G.E., PhD in Geography,
Associate Professor of Department of Global Studies.
Kazakh National
Teaching University named after Abai,
Republic of
Kazakhstan
ECONOMY OF THE
REPUBLIC OF KAZAKHSTAN IN THE 20 YEARS OF INDEPENDENCE
Special attention in this article is paid
to oil and gas development, metallurgy, agriculture, construction of
inter-country transportation routes in the territory of Kazakhstan, which
define the current status and development of the economy of the country.
Modern Kazakhstan
is a unitary state located in the heart of Eurasia. In accordance with the Constitution, the territory of the country
is indivisible.
After
disintegration of the former USSR, alongside with other Republics, Kazakhstan
gained independence on December, 16th, 1991, and it is currently called the
Republic of Kazakhstan
Thanks to the
dedication, will power, strength, and hard work of our people, within a
historically short period of time, a new independent, sovereign state, the
Republic Kazakhstan, emerged in the World Map.
The country is steadily developing, effectively utilizing its resources
and potentials. On August 30, 1995, the
current Constitution of the Republic of Kazakhstan was adopted, and it became
the Basic Law of the country, which we abide now. Adoption of Constitution at that time became a symbol of final
transition of our country to market economy.
After gaining
independence, Kazakhstan changed from the old authoritarian-administrative and
planned economy to a market economy.
The basis of market
economy is denationalization of enterprises, privatization and creation of new
forms of ownership (national, public stock companies, international joint
ventures, etc.).
Development of
Kazakhstan within the period of sovereignty is characterized by extensive and
fundamental changes in the social and economic system of the country. Economic
reform has been carried out in all spheres of economy, particularly in the
housing sector, utilities, social security sector, and national legislation. In
2003 European Economic Union and the United States Congress recognized
Kazakhstan as a country using market economy.
Priorities set by the President are very clearly defined, Kazakhstan has
to become one of the fifty most competitive countries in the world.
We achieved
remarkable results in establishing a democratic state and civil society,
transitioned to market economy and occupied a rightful place among developed
countries of the world.
Today our Republic
is proud of the progress of its economy. It is especially evident in comparison
with many countries, experiencing significant economic problems due to
financial and economic crisis.
According to some foreign experts and analysts, steady economic growth
of Kazakhstan can be attributed to the increase of world prices for natural
resource, that our country is rich with.
During the years of
independence, many large enterprises were built in Kazakhstan, which utilize
modern technology and high tech equipment in processing domestic natural
resources.
In the beginning of
2011 the President of Kazakhstan has signed the Decree “On Declaring 2011 the
Year of the 20th Anniversary of Independence of the Republic Kazakhstan».
According to the Decree, the motto of the year is «20 Years of Peace and
Creation». Thank God, for two decades
our land, rich with almost all elements of Mendeleyev’s table, did not
experience any civil wars, which is not only the great achievement of the state
government, but also the achievement of all people.
The main branches
of economy in modern Kazakhstan are fuel and energy, particularly oil industry,
coal mining, petrochemical industry, ferrous and non-ferrous metal industry,
sheep breeding and a grain husbandry.
Vast natural
resources are the major basis of economic progress of the Republic of
Kazakhstan. According to international
experts, Kazakhstan, which territory is the 9th in the world,
possesses over 6 % of world minerals, among them iron, copper, lead, as well as
rare materials, such as uranium, etc.
Kazakhstan is among the top 10 countries in confirmed energy resources –
oil, natural gas and coal.
Kazakhstan occupies
the sixth place in the world in terns of natural resources. In terms of natural resources per capita,
Kazakhstan is one of the highest in the world.
Our country occupies the first place in the world in terms of tungsten
and barite reserves. It occupies the
second place in the world in terns of chromite, uranium and phosphate
reserves. It occupies the third place
in the world in terms of manganese reserves (following USA and Ukraine), forth
place in the world in terns if lead and molybdenum reserves, and it occupies
the eighth place in the world in terns of iron reserves. Kazakhstan is ahead of many countries in
terms of oil and gas reserves, and occupies first place in the world and in CIS
in terms of ferrous and non-ferrous metals.
More than five
thousand deposits of various minerals were discovered in Kazakhstan in the last
few years. Among them, there are 267
deposits of hydrocarbons, 560 deposits of metallic minerals, 50 deposits of
coal, 54 deposits of uranium, 1,285 deposits of groundwater, 2,624 deposits of
various minerals.
Thanks to strategic
economic development program, developed by the Government, Kazakhstan achieved
remarkable success in the years of independence.
Compared to other
CIS countries, Kazakhstan’s economy grows rapidly, with its GDP growth annual
rate of 9-11%.
The
Republic of Kazakhstan is rich in mineral resources, vast agricultural lands,
skilled personnel, remarkable industrial potential. Modern Kazakhstan has an
active market economy.
As per Kazakh
Agency of Statistics, ten years ago GDP per capita was hardly more than 700 US
Dollars, in 2004 it grew to 2,700 US Dollars, and in 2009 the GDP per capita
increased to 5,400 US Dollars. In his Address to the People of Kazakhstan, the
President of Kazakhstan stated that beginning of 2011 the GDP per capita
reached 9,000 US Dollars, and by 2015 it will reach 15,000 US Dollars.
In 2002
international rating agency Moody’s upgraded Kazakhstan to Baa3, thus
Kazakhstan reached investment grade status.
In the years of
independence, more than 120 billion USD in foreign direct investment were
attracted in the economy of Kazakhstan. Kazakhstan attracts more foreign direct
investment per capita than other countries in the CIS
Among the major
investors in economy of Kazakhstan are the United States of America,
Netherlands, United Kingdom, Russia, Canada, China, South Korea and Japan.
Foreign investors
are confident that Kazakhstan is a reliable partner, which guarantees stability
and mutually beneficial cooperation.
In the last few
years Kazakhstan started investing in other countries economies, in particular,
Kazakhstan invested in construction Gudon hydroelectric power station, grain
terminal to Baku (Azerbaijan) and in Amirabada (Iran). It also invested in acquiring oil refineries
in Ukraine and Belarus.
Beginning of 2005,
international reserves of Kazakhstan, including National Fund ($ 5.3 billion)
were over 14 billion US Dollars. Today, September 1, 2011 international
reserves of National Bank amounted to 32,062 billion US Dollars. Total international reserves of the country,
including National Fund assets, are 59 billion US Dollars.
Kazakhstan is
important to world energy market stability, because it is one of the top ten
countries in terms of significant oil, natural gas and coal reserves.
Oil sector is a
major part of Kazakhstan economy.
Kazakhstan is not a member of OPEC, but it possesses 3% of world
reserves of hydrocarbons. It has many
good reasons for striving to strengthen its position in the global energy
market.
Oil and gas
industry occupies 21 per cent of GDP.
Oil and gas exports rose from 32 per cent to 64 per cent. Share of oil and gas in the State budget
income, including deposits to the National Fund, is 40% to 63%. Overall, the
share of the raw material sector in 2009 amounted to 62%.
As per experts of
College of political decisions RFGNUM, oil production is currently 85 million
tons. Natural gas production is 54 billion
cubic meters, and by 2020 the country will extract 130 million tons of
oil. Stability of delivery is a major
factor. Kazakhstan does not have sea
ports, but has favorable strategic location in terms of energy resources
delivery. These opportunities will become even more favorable. In 2010
Kazakhstan exported 73 million tons of oil, versus export of 68 million tons of
oil in 2009, which is 5,5 % yearly increase. The country can supply 80-100
million tons of oil yearly, for 40-50 years.
During the period of time from 1995-2010 104 billion US Dollars were
invested in hydrocarbon industry by foreign and domestic investors.
Kazakhstan is a
vast oil-producing country, however it occupies 100th place in the world in
terms of gasoline production quality. Therefore,
we need to import gasoline #96, and jet fuel.
As per government official statement, modernization of oil refining
plants will take 5 more years.
Kazakhstan, along
with Russia, is interested in Caspian off-shore development. More than 120 forecasted deposits were
discovered in the Kazakhstan sector of Caspian sea. Projected reserves are
estimated as 8 billion tons of natural resources, including 4,5 billion tons of
oil. Currently, Today, 8 oil and gas oil
fields are being developed in the Caspian off shore.
During the World
economic forum on Middle East in 2008, President of Kazakhstan signed an
agreement on development of Caspian Energy Hub (CAH). This project will unite all countries of the Caspian region, in
order to lead the Republic of Kazakhstan to economic integration.
According to the
official resources, this project will cost 15 billion US Dollars, and will be
implemented in 2010-2015.
Energy hub was
developed in Qatar for countries of Persian Gulf countries. Similar project named “Aktau City” will be
implemented in Kazakhstan. Aktau city is a very favorable location for such an
energy hub. 80% of all energy reserves
of this region are located in Mangystau, and according to the results of the
study performed by the international agency “Titch”, investment rating of this
region is stable. Therefore, many world known oil and gas companies are eager
to invest in this region.
CAH is a hub that
combines all major oil and gas companies, providing them with all supporting
industries and a various services. Oil and gas extracted in the Caspian region
must to be processed here and should be refined and exported to other
countries.
In view of internal
and world demand for petrochemical products, an oil refinery complex is being
built near the town of Tengiz in Atyrau oblast, for production of styrene and
polystyrene.
In terms of uranium
deposits, Kazakhstan holds the leading position in the world, being only second
to Australia (26% of world reserves and 56% of CIS reserves are located in Kazakhstan). 1 million tons of uranium reserves are
located in the territory of Kazakhstan, out of total 4 million tons of world
uranium. More than 60 thousand tons of
uranium are annually extracted in the world. Kazakhstan occupies the first
place in the world in uranium extraction, producing 15 tons of uranium by the
end of 2009. In 2010, uranium mining
increased to 17,588 tons. Current
objective is increasing uranium production to 19,000 tons annually.
Ulbinsk metallurgic
plant processes uranium and produces uranium powder for nuclear power plants.
Kazakhstan supplies uranium fuel to the United States, Russia, countries of
European Union, and Japan.
Kazakhstan is a
major exporter of oil, natural gas, coal, ferrous and nonferrous metals.
Commercial tourism,
oil and gas production, engineering, food processing and textile industries,
providing transportation and logistics services, establishment of special hubs
in metallurgy and construction are major aspects of the economy of Kazakhstan.
In recent years in
Kazakhstan, great attention is paid to the construction of international export
routes. A major gas pipeline was
constructed in Turkmenistan-Uzbekistan-Kazakhstan, via Khorgos in China, aiming
at exporting 10 billion cubic meters of gas.
A major highway, 2,787 km long, is being constructed between Western
Europe and Western China. Construction
of a railway between Zhetygen, Almaty
region, and Khorgos, China, is almost
finished. Construction of
Beyneu-Bozoy-Shimkent was launched in 2010, which will be completed in 2015.
Agro-Industrial
complex, and grain production in particular, is a major sector of the economy
of Kazakhstan. 20,8 million tons of gain were produced in Kazakhstan, however,
in 2010 grain production fell to 13.6 million of tons. These fluctuations are
due to Kazakhstan’s climatic conditions.
Half of the grain is harvested in the Northern regions of Kazakhstan and
in Kostanai region.
In spite of
challenging weather conditions, this year farmers of the Republic' of
Kazakhstan were able to achieve excellent results in grain production. Gross
grain harvest was about 21 million tons of grain in bunker weight. It was the second record high harvests over
the past five years.
Kazakhstan is one
of the leaders among the countries of the CIS, and in the world, in terms of
export of durum wheat. Based on the
amount of yearly grain production, Kazakhstan exports approximately 5-8 million
tons of grain to the world marking, occupying the 5th place in the
world in terms of grain export. In
addition, Kazakhstan exports 2 million tons of flour and is the leading
exporter of flour in the world. In recent years flour-milling industry in
Kazakhstan has significantly grown, and it currently occupies majority of the
regional market in Central Asia and in Afghanistan.
In recent years,
the number of livestock in Kazakhstan has increased. As of July 1, 2011,
Kazakhstan occupies the first place among the CIS countries in terms of amount
of sheep and goats (22,227.4 million heads),
it occupies the second place, after Russia, in terms of amount of cattle
(6,878.1 million,), and it is the third after Russia and Ukraine in terms of
amount of pigs (1,643.0 million).
Cotton production
complex is being established in Southern Kazakhstan, for cotton growing,
harvesting, and fine processing.
Cotton and wool are
major agricultural export commodities in Kazakhstan and they are most commonly
exported to China. Cotton export takes
15% of agricultural export, and wool takes 25% of total agricultural export of
Kazakhstan.
However, from 1990
to 2010, the total investment in agriculture decreased by 10%, and as a result,
food prices in Kazakhstan grew 12,8% during 2011.
As per expert
evaluation, prioritized development of oil and gas sector is unable to ensure
steady long term growth throughout the national economy. Therefore, a strategic
goal has been developed to use this sector as a “driving force” for active
development of all other sectors of economy.
Innovative Industrial Development Strategy of Kazakhstan (IIDS) was
created for this purpose, and it should be implemented before the first half of
2015/
Cabinet of
Ministers is planning to allocate 14.9 billion Tenge in 2011 for implementation
of this program. 19.9 billion Tenge
will be funded by the state funds, remaining amount will be funded by private
investors.
The main goal of
the Strategy is diversification of all sectors of Kazakhstan’s economy and
transition from extraction-based development to service and technology based
model of economy.
One of the main
priorities in terms of bringing Kazakhstan to the level of the most competitive
and growing countries of the world, is development of its economy in accordance
with world globalization trends. The
Kazakhstan Government is committed to implement breakthrough projects of international importance, to establish enterprises for the production of export oriented
goods, establish joint ventures in oil
and gas, chemical industry, engineering and agricultural industries. It is planned to establish biotechnology
centers with participating international companies and experts.
Development of
small and medium-sizes businesses plays important role in modern economic
policy of Kazakhstan. The economic effect of small and medium-sized businesses
in Kazakhstan is 1.5 times lower compared to developed countries. Share of small and medium-sized businesses
amounts to 31 per cent, even though 92 per cent of all enterprises fall into
the category of small and medium sized businesses.
Share of small and
medium-sized businesses in the USA is approximately 52 per cent, in Italy – 57
per cent, in Korea – 50%. Uzbekistan –
52,5 per cent.
Government of
Kazakhstan made a decision to raise the share small and medium sized businesses
in the total GDP level to 40 per cent, by 2020. Therefore, the Government of Kazakhstan declared 2011 the
"Year of Small and Medium-Sized Businesses.
The impact of the
global financial and economic crisis severely affected the socio-economic
development of most countries in the world. But Kazakhstan managed to maintain
high economic growth and successfully created a solid foundation for further
sustainable development.
In 2010, Kazakhstan
achieved GDP growth of 7.5 per cent, industrial production growth was 10.5%,
and most importantly, manufacturing industries account for 19 per cent of this
growth. Inflation rate in 2010 was 7.8
per cent.
“A Map of
Industrialization” was created in Kazakhstan, which outlines 294 projects
costing about 8 trillion Tenge. 152
investment projects were launched in 2002, with total investment of 801.8
billion Tenge.
2011 will become
the year of a steady growth of the Kazakhstan economy.
In 2011, it is
planned to implement a project for the modernization of existing enterprises.
It should cover approximately 200 enterprises
Special emphasis is
made on the manufacturing industry in this project. A large number of manufacturing enterprises will be developed
with the goal of producing goods with high added value. Great expectations in Kazakhstan are based
on rich natural resources, particularly oil and gas reserves, which will ensure
prosperity of the country and enable implementation of vast economic and social
reforms.
As we know, in
2010, Republic of Kazakhstan, Russia and Belarus signed the Customs Union
Agreement which came into force June, 1, 2011.
Frontier territories of Kazakhstan will play significant role in
Kazakhstan’s economy, since the Customs Union Agreement eases basic business
processes in these regions.
As per National
Bank estimate, GDP growth this year will be 7 per cent. Inflation will remain on the last year’s
level, 6,0 to 8,0 per cent.
Literature
1. Nurgaliev K.R.,
Nurgaliev A.K. Economy of Kazakhstan. Almaty, Ziyat Press, 2007.
2. Akhmetov E.A.,
Berdygulova G.E. Economical and social geography of Kazakhstan. Almaty, 2011.
4. http://www.invest.com/journals/48/81.html
5. http://www.usmet.ru/news.php?=show_news_item&id=4245