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WHAT CAN BE EXPECTED FROM KAZAKHSTAN’S NEW REGIONAL POLICY AFTER THE ECONOMIC CRISIS?
AZAMAT MUKHAMEDZHANOV,
President of “ECOlight” non-governmental association, Astana
Recovering from the financial and economic crisis, the Kazakh authorities are going to develop the country’s regions. Nursultan Nazarbayev, President of Kazakhstan, spoke about that in his Annual Address to the Kazakh people in 2010.
The economic inequality of the Kazakh regions continues to grow, and only the smoothing over the disproportions can create more favourable conditions for Kazakhstan’s development.
Proceeding from such economic indicators, as the per capita GDP, the index of industrial production, the per capita investment in the fixed capital, the percentage of self-employed people in the whole employed population and the poverty level, one can divide the Kazakh regions up into three groups:
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highly developed regions (oil and gas industry areas of the Western Kazakhstan as well as the cities of Astana and Almaty);
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medium-developed regions (industrial areas of Kazakhstan’s North, East, West and Center);
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poorly developed regions (agrarian areas of Kazakhstan's South and North).
Even during the crisis Kazakhstan’s raw materials regions were the most competitive because of the high oil prices.
At the same time, the two largest cities of Kazakhstan, Astana and Almaty, develop more slowly than they did before. For all that, they managed to keep their leading positions in spite of the economic slack.
The medium-developed regions, including Kazakhstan’s company towns, had a more difficult time. The enterprises forming company towns had to tighten their belts because of the low products prices.
As regards the poorly developed agrarian areas, they are to improve their situation after implementing the Five-Year Programme of the Accelerated Industrial-Innovative Development of Economy (PAID).
The main purpose of the PAID, which is based on the budget redistribution, is to smooth over the economic inequality of the regions. There is no telling how effective it will be. The “oil” money going to the poorly developed regions, on the one hand, facilitates the economic recovery in those regions, but, on the other hand, makes them dependent on extra inflows of money. Take, for example, the agrarian areas of Kazakhstan as well as the Kazakh capital Astana that greatly depends on direct investments. Astana gets many state resources. In Almaty, where indicators of the per capita investment in the fixed capital from all the sources were lower by one third than in Astana, the private capital investments prevail. Almaty remains the most attractive place in Kazakhstan for the investment inflows because of its location and high population density.
The state’s financing the regions is not very transparent. The first reason is the geographic remoteness of the regions (as a rule, the more poorly developed a region is, the more remote it is from the largest cities), and, therefore, it is difficult to control the financial resources granted by the central government. The second reason is the corruption among the local government officials grows in connection with insufficient payment for the budget services. The affiliated agencies are often created with the participation of the local government officials. The third reason is that the officials are often reshuffled, which prevents the regions from developing dynamically. Officials hold their posts for a period from 0.5 to 3 years, and then they transfer to new positions. It is impossible to solve the regions’ problems for such a short period.
The previous programmes of regional development were ineffective. Since the early 2000s a number of programmes has been proposed and approved – Kazakhstan’s Development till 2020, Thirty Corporative leaders, the Programme of Kazakhstan’s belonging to 50 highly developed countries, Five great feats. Apart from that, each government ministry and agency has his/its own development programme.
The Concept of Kazakhstan’s regional policy for 2002-2006 and the Strategy of Kazakhstan’s territorial development till 2015, which replaced the Concept, have more differences than resemblances. “We cannot achieve the accelerated diversification without the regional development reform. That’s why we must form the economic growth centers”, Nursultan Nazarbayev advanced this slogan in his Address to the Kazakh people in 2010, 4 years after the Strategy of Kazakhstan’s territorial development till 2015 had been adopted. The quotation is the foundation of the Strategy till 2015. The poorly developed regions will be developed at the expense of the highly developed regions, while the other regions should keep up with them.
At the initial stage of the post-crisis period the highly developed regions are supposed to form powerful areas of the economic upsurge. How realistic is that?
1. Oil and gas areas of the Western Kazakhstan (the Atyrau and Mangistau regions) are the most important areas for Kazakhstan, which can make a major contribution to the economic recovery after the crisis. This is shown by the fact that the Ministry of Oil and Gas has been established on March 12. While the oil price in the world markets remains high, Kazakhstan can solve socio-economic problems for the two regions. The low population density, underdevelopment of the rural areas, poor development of the territory except the seaboard and nondiversified industry makes the regions’ situation still worse with the hydrocarbon prices’ fluctuating. This region is as vulnerable as the moneyless regions where the coal and steel industries prevail. There is a need to get the labour resources involved.
2. The old capital and the new one (Almaty and Astana). The two cities continue to be highly developed areas due to their modernized economy and the prevailing of the third sector, which is, in the main, the market sector (Almaty) or the sector with many non-market, state services (Astana). The two cities have different potential: Almaty’s advantages are many labour resources and the good transport system. The densely populated suburbs ensure the agglomeration’s extra development (1.85 million people live in the Almaty agglomeration, of whom about 500 thousand people live in the suburbs). Astana loses to the previous Kazakh capital because it has no human resources, and its population density in the suburbs is low (760 thousand people live in Astana's agglomeration, of whom 100 thousand people live in the suburbs).
So, the accelerated industrial and innovative development of Kazakhstan will be connected with the development of the three regions – the oil and gas industry areas of the Western Kazakhstan, Astany and Almaty. The economies of Kazakhstan’s largest city and the oil and gas industry regions, provided that the oil price is high, are expected to develop rapidly.
March 22, 2010
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