Kazakhstan in Reality

By Shaunak Raha

Contrary to how Kazakhstan is portrayed in the highly popular Borat series, the real Kazakhstan has actually had rather good fortune in recent times. Kazakhstan has had over 9% GDP growth for the last five years. It even plans to double its GDP by 2008 and triple it by 2015 compared to that in 2000. The Kazakh government’s monetary policy in recent years has been considered exemplary for other former Soviet nations. It has been so good that in 2000, Kazakhstan became the first former Soviet nation to repay all their loans to the International Monetary Fund, a good seven years ahead of schedule. In 2002, the US Department of Commerce even classified Kazakhstan as a market economy due to impressive reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources.

To enable such a turnaround in economic fortunes, the government of Kazakhstan, headed by President Nursultan Nazarbayev, has been wise about their policies on international relations. The government has made it a point to maintain good ties with other nations in order to attract foreign investment. It realized soon after independence that to allow the economy to heal, it had to tap Kazakhstan’s most abundant resources, which include oil, coal and metals including iron, chromium, copper, zinc, lead and even uranium and gold. Naturally, it was difficult for an impoverished country accustomed to central planning to be able to process these resources on their own due to lack of both entrepreneurship and money. Thus, the government, in a bid to break out of its centrally planned past, tried to appeal to foreign firms for direct investment. It seems to have worked, attracting the likes of ChevronTexaco, ExxonMobil, BP and Agip in the oil sector. The world’s third richest man, L.N. Mittal has invested heavily in a huge steel plant that used to be run by the Soviet government and was subsequently closed down after its dissolution. Even the banking sector has been doing well, attracting major players like ABN AMRO, Citibank and HSBC.

However, the returning of debt to the IMF and other countries has had a side-effect on Kazakhstan. From 1991 to 1999, the country underwent a major economic depression that led to the government being forced to cut its spending on education. As a result, despite inheriting a 100% literacy rate at the time of independence, it fell to 99.1% for males and 97.7% for females as of 1999. However, the government addressed that issue in 1995 by providing a mandatory, socialized secondary school education to all citizens. The field of education seems to be one area where the Kazakh government has decided to retain its Soviet roots. The education system is almost exactly the system that the Soviet Union followed and the government does not even permit private education in Kazakhstan. Although the education system harks back to Kazakhstan’s centrally planned roots, the government has made the smart move of trying to alter the system to prepare students in the system better for mobility in the world markets.

Thus, with a good literacy rate, a strong increase in GDP, sound foreign policies, and also free publicity from the popular film, Borat, Kazakhstan seems to have a bright future for not only its own economy and society, but also for international investors.