OECD Development Pathways. Multi-dimensional Review VOLUME I. INITIAL ASSESSMENT

Transcription

1 OECD Development Pathways Multi-dimensional Review of Kazakhstan VOLUME I. INITIAL ASSESSMENT OECD DEVELOPMENT CENTRE

2 Table of contents Acronyms and abbreviations 13 Editorial 16 Facts and figures of Kazakhstan 18 Executive summary 21 Chapter 1. Overview: Realising Kazakhstan's development vision 25 Kazakhstan has undergone deep trarisformations since independence 26 Structural determinants of growth 27 Kazakhstan's vision, objectives and strategy for Summary and main findings 31 Key constraints to development 35 References 37 Annex 1.A1. Citizen stories of the MDCR Workshop 38 Chapter 2. How's life in Kazakhstan? 41 Life in Kazakhstan has improved significantly over the last decade 42 Material conditions: Incomes, living Standards and employment have increased since 2000, while the quality of jobs and housing remain sources of concern The quality of life remains low in many respects despite progress in key education and health outcomes 62 Notes 80 References 81 Chapter 3. Bolstering growth in Kazakhstan 85 Growth has been impressive, but needs to be sustained to realise Kazakhstan's high ambitions 86 External conditions largely shape Kazakhstan's current growth perspectives Oil-based growth poses challenges for macroeconomic and financial sector stability and the development of the non-oil economy 94 Raising labour productivity is essential to achieving long-term growth 102 Given the already high toll on the environment, future growth should make economic activity more sustainable 108 References 115 MULTI-DIMENSIONAL REVIEW OF KAZAKHSTAN: VOLUME 1. INITIAL ASSESSMENT OECD

3 Chapter 4. Enhancing sectoral competitiveness in Kazakhstan Kazakhstan is making some improvements in its competitive stance in non-resource sectors 120 Kazakhstan's diversification process would be challenged by a future resource boom 124 Access to external financing is important for private sector development 128 Sustained competitiveness requires a boost in private, public and foreign Investment Governance and regulation are fundamental for Kazakhstan's economic reform process 1^8 Developing high-quality and flexible skills is essential 146 Enhancing Innovation capabilities is a requirement for Kazakhstan's competitiveness in the future 15 Notes 157 References 158 Chapter 5. Enhancing governance and institutions for sustaining inclusive growth and well-being 167 Tables Corruption and the institutional framework hold Kazakhstan back 170 Regulatory burdens have been reduced and transparency has improved, but key regulatory challenges remain 175 Government and public administration suffer from a lack of capacity Integrity is a key governance issue in public procurement 185 Open and inclusive policy making 190 Notes 197 References Unlike in most benchmarking countries, Kazakhstan's Investment intensity is shrinking as is the share of private Investment The design of the new industrial policy programme ( ) is built on the experience of the previous programme Kazakhstan is less active in R&D than the benchmarking countries Innovation indices partially reflect recent production Upgrades A1.1. Trade and extractive sectors were the two largest economic sectors in Corruption can hold back private sector development, particularly for SMEs While Almaty has the highest heating price, heating is more affordable than in Shymkent, Kyzylorda and Taraz The WJP Open Government Index 2015 showed that Kazakhstan's Performance is below most of the comparators Figures 2.1. Income has grown dramatically in Kazakhstan since the year Satisfaction with living conditions is also on the rise MULTI-DIMENSIONAL REVIEW OF KAZAKHSTAN: VOLUME 1. INITIAL ASSESSMENT OECD 2016

4 2.3. Current and expected well-being outcomes for Kazakhstan: Worldwide comparison OECD well-being framework for developing countries comparison Gender disparities in Kazakhstan: Selected indicators Income levels and their evolution since Poverty has fallen dramatically in Kazakhstan since the year Inequality is relatively low in Kazakhstan Growth has been progressive in Kazakhstan Taxes and transfers play a limited role in reducing inequality in Kazakhstan The emergence of the middle class in Kazakhstan Inequality in Territorial Level 2 regions Satisfaction with conditions of living is relatively low in Kazakhstan but has improved over the last years Economic growth has led to massive job creation Youth unemployment is low but hides regional disparities in attachment to the labour market by young people Minimum wages are low but play a role in the wage determination process The proportion of low-paying jobs in Kazakhstan is high The self-employed and informal employees receive much lower wages Migration in Kazakhstan poses challenges for increasing the skills of the labour force Almost all the Kazakhstani population live in dwellings with private access to an indoor flushing toilet but access to water in rural areas could be improved Levels of satisfaction with the availability of housing Enrolment rates for pre-primary, primary and secondary levels are still below average Mathematics and science achievements are at the bottom of the scale while reading achievements are the lowest across the benchmark countries Kazakhstan reports one of the lowest health outcomes with respect to life expectancy and adult mortality ratios Kazakhstanis report low self-reported health status and are critical of the national health care system Per capita health expenditure (local and Republican budgets), life expectancy and TB morbidity by oblast Perceived social network support in Kazakhstan is the lowest among benchmark countries whereas the stock of social capital is relatively high Subjective indicators regarding corruption within the government are very high Particulate matter pollution is high in cities in Kazakhstan PM10 in cities is also high in Kazakhstan Satisfaction with water and air quality or latest available year Reported crimes in Kazakhstan and reports ofbeing victims of crime follow the same upward trend Perceived safety has remained stable in Kazakhstan over the last four years A steady increase in life satisfaction but still lower than the benchmark average 79 MULTI-DIMENSIONAL REVIEW OF KAZAKHSTAN: VOLUME 1. INITIAL ASSESSMENT OECD

5 3.1. Recent growth of the economy of Kazakhstan is impressive Even without accounting for related activities, extractive industries generate a large share of value added Based on recent Performance, Kazakhstan appears well placed to catch up with OECD income levels Economic growth appears less reliant on the oil and gas sector than a decade ago Oil production is slowing Investment from abroad has failed to keep up with real GDP growth since Exports are dominated by commodities and distant destinations Strong economic linkages with Russia through large trade flows Dollarisation has stabilised for loans, but continues to increase for deposits Oil revenues fuel the National Fund and the government budget The decline of the non-oil deficit has stalled Until August 2015, price stability was maintained through tight management of the exchange rate The real exchange rate has been volatile Wages increased in line with GDP, but rose rapidly in dollar terms The GDP share of services has increased at the expense of the manufacturing share Higher labour utilisation and productivity both raised incomes Total factor productivity has been driving GDP growth in Kazakhstan, but is slowing Kazakhstan's dependency ratio will only rise marginally until The high labour force participation leaves little room to further increase labour utilisation Employment is concentrated in the least productive economic activities Even with large labour shifts to more productive sectors, GDP per capita would remain considerably below the OECD average Investment as a share of GDP is low given Kazakhstan's ambitious development objectives High economic growth came with an increase in greenhouse gas (GHG) emissions ^ Renewables in Kazakhstan only account for a small share of total electricity production Energy consumption increased only marginally more slowly than economic activity The high energy intensity of the Kazakh economy is driven by the industrial sector Kazakhstan's level of renewable surface water is low, especially given the country's size Air pollution in Kazakhstan is mid-range While resource abundance increases with economic development, countries' dependence on extractive sectors decreases 1iq 10 MULTI-DIMENSIONAL REVIEW OF KAZAKHSTAN: VOLUME 1. INITIAL ASSESSMENT OECD 2016

6 4.2. Labour productivity in the transport equipment as well as chemical and pharmaceutical sectors experienced a boost over In the fastest growing manufacturing activities, labour productivity levels in Kazakhstan are above the levels in peer developing countries Job creation was fastest in the transport equipment, finance and insurance as well as hospitality sectors Wages in selected manufacturing sectors are competitive in Kazakhstan Lagging export competitiveness both in non-raw material goods and services Kazakhstan's exports are highly concentrated Kazakhstan has fewer products with a revealed comparative advantage than two decades ago Domestic credit to the private sector is low Düring recent years, the expansion of bank lending was just in line with economic growth Retail lending has grown faster than corporate lending since mid Comparatively high interest rates on retail loans make lending to businesses less attractive Lending to small businesses was hit by the banking crisis, but has started to recover Collateral requirements are high The stock market is underdeveloped Inward FDI flows and stocks in Kazakhstan are high compared to peer countries Recent Investment is concentrated in manufacturing and construction Extractive sectors still attract most foreign Investment Wealthiest individuals have a relatively high net worth Corruption is perceived to be widespread An inadequately educated workforce is more likely to be a key constraint among larger firms in Kazakhstan Firms in Kazakhstan are less likely to offer formal training compared to most peers Kazakhstan adopts foreign technologies through capital goods Imports The share of services inputs in agriculture, extractive sectors and manufacturing is lower in Kazakhstan compared to developed countries Kazakhstan has improved the leveraging of ICTs over time A1.1. The labour productivity gap is significant in Kazakhstan's largest economic sectors A1.2. Monthly wages increased fast in most sectors over A1.3. Kazakhstan has relatively low FDI restrictions A1.4. Access to finance is a key constraint for doing business A1.5. Better logistics are associated with higher productivity A1.6. Educational attainment in Kazakhstan is nearing OECD levels A1.7. Proportion of unskilled workers in manufacturing activities is relatively low in Kazakhstan A1.8. Business Service productivity and intensity of use are positively associated with manufacturing productivity 165 MULTI-DIMENSIONAL REVIEW OF KAZAKHSTAN: VOLUME 1. INITIAL ASSESSMENT OECD

7 5.1. Conceptual framework for diagnosing governance constraints Reported prevalence of unofficial payments in Kazakhstan in key public services such as health and education where the delivery outcomes are poor Limits on government powers and the protection of fundamental rights are weak ^ There are also gaps in regulatory enforcement and civil justice Transparency of government policy and regulatory bürden have improved in Kazakhstan While Kazakhstan has a slightly above average Performance in terms of capacity for sectoral reforms, it lags behind more advanced economies Weaker belief of meritocracy is associated with higher perception of corruption Hiring practices in the work place perceived to be based on connections without regard for merit are associated with higher perception of corruption Co-ordination in Kazakhstan's public sphere is lower than most of the benchmark countries Government procurement expenditure forms an important part of GDP Bribery risk in public procurement is high Kazakhstan has made progress in various areas of public procurement There are several key challenges, such as integrity and competition While OBI score has improved, it indicates that only limited Information is made available Kazakhstan has made considerable improvement over the years in e-government and open data initiatives 194 Follow OECD Publications on: ^ ^ Q /7Mp.//fw/Kercom/OECO_Pubs F r ^3- f#x# EB 00 hhp.-//www. oecd. org/oecdd/mc!/ A service that delivers Excel files from the printed page! Look for the StatLinks mngjm at the bottom of the tables or graphs in this book. To download the matching Excel spreadsheet, just type the link into your nternet browser, starting with the prefix, or dick on the link from the e-book edition. MUITI-DMENSIONAL REVOW OF KAZAKHSTAN: VOLUME 1. MTITAL ASSESSMENT e OECD