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How Foreign Investment in Kazakhstan Fights Poverty

Foreign Investment in KazakhstanKazakhstan is a Central Asian nation of almost 20 million people and is the second-largest former member of the USSR. According to the World Bank, it has a GDP per capita of $11,494.30 which is significantly larger than the surrounding countries. The Global Poverty & Equity Brief reports that, as of 2021, the poverty rate is 5.2%. Alongside its neighbors, Kazakhstan is abundant in resources like oil, gas, coal and uranium and capitalizes on these supplies for economic growth.

Although Kazakhstan is experiencing steady economic growth and paints itself as the most developed and reformed Central Asian country, corruption and an unorganized government exacerbate poverty. Foreign investment in Kazakhstan can alleviate these issues and potentially solidify its position as the strongest nation in the region.

Kazakhstan’s Economic Picture

As things stand, Kazakhstan holds a predominant position in the region. It connects the South Asian market to the markets of Russia and the EU with railways and ports. For Western producers, Kazakhstan opens access to “100 million consumers in Caspian Sea countries, 76 million in Central Asia and 350 million in Western China,” according to the U.S. Department of Commerce’s International Trade Administration (ITA).

Furthermore, the ITA believes that it provides potential for US agricultural markets, as Kazakhstan’s growing middle class opens more opportunities for U.S. investment. In turn, this global financial involvement in Kazakhstan further expands the middle class and decreases poverty.

Most notably, Kazakhstan capitalizes on its natural resources to make 58% of all exports. Through the shipment of oil, natural gas, iron, copper and uranium, Kazakhstan trades with China, Italy, Russia, the Netherlands, Uzbekistan, India, Turkey and France. Trade with the United States (U.S.) accounts for just more than 1% of its exports.

Over the course of 2023, real GDP is expected to increase by almost 4%, an increase over the 3.2% growth in 2022.

International Involvement

Kazakhstan receives the most foreign direct investments in Central Asia, something both expected of and attributed to its relative economic strength in the region.

Kazakhstan established the Astana International Financing Center (AIFC) in 2018 to attract countries and companies to invest in the region. The AIFC offers financial and legal support to investors and promotes environmentally sustainable development. This initiative encourages green foreign investment in Kazakhstan, which can help boost the domestic economy and create more job opportunities, ultimately helping in the fight against poverty.

Furthermore, the Overseas Security Advisory Council (OSAC) is a U.S. organization that cooperates with businesses and universities to further integrate the U.S. and its mission with different countries in the world. Kazakhstan’s specific OSAC mission predominantly aims to establish U.S. security connections but also aims to strengthen financial involvement between the two nations. Specifically, it allows for the creation of the Special American Business Internship Training Program (SABIT).

The U.S. Department of Commerce labels SABIT as a program that endorses and facilitates fair economic trade between the U.S. and Kazakhstan. As of 2023, the program has enabled more than 470 Kazakhstani business leaders to gain first-hand experience with American business models. This training is highly individualized and specific to each business and creates connections between equivalent businesses in the two countries. Although mostly pertaining to private corporations, the governments occasionally interact to integrate the markets. Since the program’s inception in 1990, the total generated amount from the region is more than $1 billion. As of 2021, all SABIT interactions in Central Asia have focused on renewable energy. With this shift in focus and general improvement of business practices, SABIT helps improve the Kazakhstani economy and alleviates domestic poverty.

Resilience to Geopolitics

Kazakhstan is invested in geopolitical relationships but is structured to not face major influence from world events. The World Bank reports that Russia’s economic downturn as a result of the Ukraine War will in fact derail Kazakhstan’s supply chains and weaken trade. This is further exacerbated by the fact that Kazakhstan’s main oil pipeline (providing 80% of Kazakh oil) was damaged in the Russian Black Sea terminal. Nonetheless, rising oil costs have made oil exports more valuable and reduced Kazakhstan’s current account deficit by almost 1% as of 2021.

In response to sanctions surrounding Russia, Kazakhstan has expanded trade partners and sought out partnerships in East Asia, especially through China’s Belt and Road initiative. By cementing itself in intercontinental routes like the Trans-Caspian International Transport Route from South Asia to Europe, Kazakhstan ensures that it will forever benefit from global trade.

Foreign investment in Kazakhstan is becoming significantly more common and important as the country proves itself to be receptive to and valuable for international investors. With Kazakhstan’s increasing integration with the global economy, there will be a growth in the labor force and a potential decline in poverty levels.

– Sahib Singh
Photo: Wikimedia

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Kazakhstan’s Rise out of Poverty

Kazakhstans Rise out of PovertyKazakhstan, a Central Asian country bordering Russia to the north and China to the east, has witnessed tremendous strides in poverty reduction over the past three decades. The nation gained independence after the fall of the Soviet Union in 1991, and its government became heavily involved in Kazakhstan’s rise out of poverty by reforming the nation’s economic and political state. In 2001, the rate of individuals living below the national poverty line was 46.7%. Since then, the rate has fallen to 4.2%. Health and education conditions have also improved during this time, and as of 2017, the Asian Development Bank reported that 100% of its citizens had access to electricity. Government policies that developed the energy sector, opened the market, attracted foreign investment and provided social services to citizens, greatly contributed to these positive developments.

The “Kazakhstan – 2030” Strategy

In 1997, former President Nursultan Nazarbayev announced the “Kazakhstan-2030” Strategy. The following priorities were delineated for the nation:

  1. Defense of their independent status
  2. Unify citizens both socially and politically
  3. Attract foreign investments and establish domestic profits that contribute to an open, growing economy
  4. Education and health for citizens and sustainability for the environment
  5. Increase energy sector extraction and exportation
  6. Develop communication and transportation infrastructure
  7. Enhance efficiency in the public sector while representing the people

Steps to achieve these objectives were then broken down into segmented plans that addressed the country’s immediate needs in concordance with the goals. For instance, state programs addressing industry growth, education reforms and language standardization were created for the 2010 to 2020 period to increase GDP, human capital and societal unification.

Economic Reforms

Kazakhstan possesses the richest mineral and hydrocarbon deposits in Central Asia. The nation solicited foreign investment and created national companies in order to develop its energy sector after gaining independence. In 2016, the nation ranked seventh globally in coal exportation and one year later it ranked 12th globally in oil production. Profits from this sector have greatly impacted Kazakhstan’s rise out of poverty by contributing to citizens’ financial prosperity and the government’s ability to fund internal development.

The government has also privatized land properties, housing properties and automobiles and made policy adjustments that benefit small and medium enterprises (SMEs) in order to create an open market. These developments, along with reforms in education and pension, have fostered a growing middle class that has contributed to the reduction of poverty.

Foreign Policy

In accordance with economic incentives of attracting foreign investment and maintaining positive trade relations, Kazakhstan operates with a “multi-vector foreign policy” by participating in international organizations and engaging in diplomacy.

Trade relationships with China, Russia and regions of Southern Asia and Western Europe have proved vital to Kazakhstan’s rise out of poverty. Creating conditions for foreign investment has led to relationships with organizations such as the World Bank Group and the Japan International Cooperation Agency that provide critical assistance in developing SMEs, educational systems, transportation, agriculture, medical care and environmental sustainability. Kazakhstan is also a member of the World Trade Organization and the Eurasian Economic Union. Additionally, in 2010 it served as chairman of the Organization for Security and Cooperation in Europe.

Looking Ahead

In 2012, Kazakhstan released a plan for 2050 that builds upon the “Kazakhstan – 2030” Strategy and aims to place the nation among the top 30 developed countries in the world. Innovations in the agricultural and food industries, empowerment of regional authorities and SMEs, increases in renewable energy and diversification in the economy, are among the priorities for this new agenda. Though the nation is focused on developing these areas, Kazakhstan’s rise out of poverty has equipped the country with the financial and structural means to continue making positive strides in all sectors of Kazakhstani life.

– Suzi Quigg
Photo: Flickr

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Poverty in Kazakhstan is Like a Small Business

Poverty in KazakhstanPoverty in Kazakhstan compares to what small businesses around the world face now that COVID-19 has changed the game. Kazakhstan is not a developing country. It is not a top player in the international market either. It is somewhere in between. And with the new and confusing world that we live in now, Kazakhstan is going to have a difficult time maintaining its good trade relations.

Kazakhstan is Like a Small Business

COVID-19 has thrown the plight of small businesses around the world into the spotlight. Now more than ever people are realizing the struggle of small businesses to stay afloat during a pandemic among other larger businesses. Poverty in Kazakhstan is like a small business. It has been making headway in the global market, but now that the pandemic has hit, its economy will struggle to stay afloat among the other major players in the world economy, an economy that goes under spells with poverty in Kazakhstan for many of its citizens. With the GDP per capita increased by a factor of six, poverty in Kazakhstan has decreased. But, this upward trend may not hold if the pandemic continues to restrict the country’s international trade. According to the Asian Development Bank, Kazakhstan’s poverty rate is 4.3%.

The US–Kazakhstan Relations

Trade relationships and federal direct investments are a key part of success for small countries like Kazakhstan. The U.S.–Kazakhstan relations have been thriving in past years, having signed the U.S.–Kazakhstan Bilateral Investment Treaty and the Treaty on the Avoidance of Dual Taxation. And this has improved Kazakhstan’s economy tremendously; in 2006, Kazakhstan became a part of the upper-middle-income bracket instead of the lower-middle-income bracket. Trade makes up 60.6% of Kazakhstan’s GDP. Federal direct investments allow for the country to focus on its largest economic contributors: mining and manufacturing.

A major country recognizing a state’s independence is a colossal benefit to a rising state, and that is exactly what the U.S. did for Kazakhstan when it was the first country to recognize its independence. The U.S. set up an Embassy and a Consulate General in Kazakhstan. Now that Kazakhstan has excellent relations with countries of the east and the west, perhaps it will be able to maintain its footing in the global economy. Kazakhstan has excellent relations with Russia, the Middle East and Asia and is completing its term on the Security Council of the U.N. These are great strides, but the progress that Kazakhstan’s economy has made may backslide because of the restriction that the pandemic has imposed on so many countries.

The Impact of COVID-19

 The World Bank has stated that “If the pandemic continues to spread and the external economic environment deteriorates further, GDP could contract by as much as 3 percent in 2020, which would significantly increase the poverty rate.” Two of its major cities – Almaty and Nur-Sultan – are already inaccessible outsiders. Large corporations have been unable to get loans because the banks are too afraid that they will not pay them back. The deficit has already grown to 3.3% of the GDP as of 2019.

Here is a look at Kazakhstan’s predicted future in 2020:

  • There could be a 0.8% drop in GDP because of decreasing demand from foreign consumers and “COVID-19 mitigation measures sap[ping] consumer demand and investment.”
  • Predictions have determined that 6% of the GDP will increase the deficit because of the aforementioned trade decline and the fact that the price of oil will be lower.

In conclusion, Kazakhstan has become a thriving market over the years. It has excellent trade relations in almost every part of the world and its poverty rate has reduced due to a bolstering in the economy. COVID-19 is affecting every country, though, and Kazakhstan is particularly vulnerable because its economy was still growing, and now may see regressions.

The situation in Kazakhstan is not all bad, though. The U.S., along with USAID, is contributing to a relief fund that will give Kazakhstan $800,000. This money will go towards fighting the virus by preparing labs, tracking down cases, etc. Though the world is certainly not perfect, it is heartening to see the quick and unencumbered responses of countries to help each other.

– Moriah Thomas
Photo: Pixabay

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Understanding How the Media Misrepresents Kazakhstan

How the Media Misrepresents KazakhstanKazakhstan, located in Central Asia, has long been viewed by the world as a post-communist, backward state — politically oppressive, economically regressive and socially intolerant. This image is an example of how the media misrepresents Kazakhstan, displaying it as a totally different world from that of developed Euro-American countries.

How the Media Misrepresents Kazakhstan

A close examination of the lives of people in Kazakhstan and of its actual political and economic situation, including the perspectives of diverse sources, reveals how the media misrepresents Kazakhstan, fueled by the after-effects of the Cold War. Many people, especially in the U.S., received misrepresentative information about Kazakhstan from the American comedy film “Borat,” a parody of Kazakhstan’s culture rather than an accurate portrayal.

Kazakh President Nursultan Nazarbayev’s long-advocated approach of “economy first, political reforms later” is described by British human rights advocate Hugh Williamson as a visage of “economy first, political reforms never” instead. Williamson claims that Kazakhstan is moving politically backward with “no free elections, little permitted open speech and the government significantly represses human rights.”

Current Developments in Kazakhstan

However, slow but apparent democratic progress in Kazakhstan has been recorded. It has been previously hindered because of the state of total economic collapse after the breakdown of the Soviet Union in 1991. Since then, however, its economy has flourished and Kazakhstan is now an upper-middle-income country, according to the World Bank.

Democratic development in Kazakhstan includes the Secular Constitution established in 1995, which outlines a separation of powers of the executive, legislative and judicial branches. Elections were also delivered in a multiparty parliament in 2012.

Further Progress in the Nation

In early 2016, Kazakhstan launched the Fostering Productive Innovations Project in cooperation with the World Bank. This is where ongoing science commercialization projects based on international standards of scientific excellence and high commercialization potential were developed.

In addition, Kazakhstan launched its first ever five-year program for Digital Kazakhstan 2020 which aims at creating the “Digital Silk Road.” This will provide support for the development of digital infrastructure and invest in human capital.

How the media misrepresents Kazakhstan extends to the nation’s political, economic, social and technological development. It is easy to dispel these cultural myths about Kazakhstan after looking into this exotic land through the lens of objective historical and social analysis.

– Heulwen Leung
Photo: Google

Seven Diseases in Kazakhstan

Common Diseases in KazakhstanSandwiched between Russia in the north, China and Mongolia in the east and Turkmenistan, Uzbekistan and Kyrgyzstan in the south, Kazakhstan is a country with many different ethnic communities. Travelers from around the world come to experience the unique history and culture of the 18 million people who call Kazakhstan home. And yet around 14 percent of those living in rural areas face unimproved access to water, and 2.5 percent need better access to sanitation facilities. With this comes a range of communicable diseases in Kazakhstan.

  1. Diarrhea is a gastrointestinal infection caused by ingesting bacteria, viruses or protozoa. These microorganisms are commonly spread by poor hygienic and sanitary practices and contaminated food and water. Symptoms include abdominal pain, fever, bloody or watery stool, bloating and nausea. Diarrhea and lower respiratory infectious diseases contribute 25 of every 100,000 annual deaths.
  2. Hepatitis A is prevalent in areas that lack proper sanitary conditions. It is primarily transmitted via the fecal-oral route or through contaminated food (such as shellfish, uncooked vegetables or fruit prepared by infected handlers). It is typically acquired in childhood, when the virus is asymptomatic but still communicable. Those who show symptoms experience malaise, nausea, jaundice and abdominal pain, and it is especially dangerous for the elderly population. The illness can last from one to two weeks to multiple months, and there is an annual mortality rate of around .058 per 100,000.
  3. Hepatitis B can cause acute or chronic liver infections caused by the HBV virus and is passed through infected blood, unprotected sex, contaminated objects such as razor blades or medical equipment and childbirth. Most of the time those infected are asymptomatic, but symptoms can occur anywhere from 30 days to six months after exposure.  Symptoms include fatigue, dark urine, nausea and, more severely, liver cirrhosis or cancer. The annual mortality rate for the HBV virus is around .317 per 100,000 in Kazakhstan. Travelers getting tattoos or piercings abroad, sharing needles or undergoing medical or dental procedures should remain wary of risks.
  4. Leishmaniasis is a parasitic infection spread through the bite of infected sandflies. Sandflies are common in forests, stone and mud structures and animal burrows, and remain active from dusk to dawn. It is categorized as a Neglected Tropical Disease, meaning it is chronic in low-income countries and prevents affected individuals from going to school or working and so contributes to the cycle of poverty. Symptoms of a cutaneous infection include skin lesions that can further be infected by bacteria. The infection can spread, causing sores and blood loss in the nose, mouth and throat. If the infection is visceral, the parasite attacks the liver, spleen, bone marrow and skin, and causes fever, weight loss and enlargement of the liver. This type can be fatal, especially if present alongside tuberculosis or pneumonia.
  5. Meningitis is a bacterial infection that affects the meninges, membrane covering the brain and spinal cord. The bacteria is transmitted through respiratory secretions, that come from sneezing, coughing or kissing. It can result in mental retardation, deafness and epilepsy and is fatal in 50 percent of untreated cases. More common symptoms are stiff neck, fever, sensitivity to light and disorientation, but five to 10 percent of patients can die within 24 to 48 hours. In Kazakhstan, the average annual mortality rate due to meningitis is 1.4 per 100,000 cases.
  6. Tick-Borne Encephalitis (TBE) is a risk especially in eastern and southern parts of Kazakhstan. Transmission seasons can vary, but ticks are most active from early spring until late autumn. Humans are infected by one of three types of TBE, which can cause fatigue, appetite loss and muscle pain. Around one-third of those infected develop severe symptoms, where the virus can cause meningitis and/or encephalitis upon first phase. Second phase symptoms include stiff neck, fever, disorientation, seizures, paralysis and even long-term effects such as memory loss, speech and language issues, mood disorders or epilepsy.
  7. Tuberculosis (TB) is an airborne bacterial infection contracted through air droplets from infected persons’ coughs or sneezes. It can also be ingested in unpasteurized milk products that contain bovine tuberculosis. The most common form is pulmonary TB, affecting the lungs, but it can also affect the lymphatic or central nervous system or urogenital areas and bones. Ninety to 95 percent of those with TB have latent TB and do not exhibit symptoms, but those who show symptoms face excessive coughing, chest pain, weight loss and weakness. Many times TB patients are wrongly and dangerously misdiagnosed with bronchitis. The annual TB mortality rate in Kazakhstan is around 15 per 100,000 cases, which has actually increased 14.1 percent from measurements in 1990.

Though Kazakhstan is considered a developing country, the government is indeed making strides in pushing for earlier vaccinations against these common diseases in Kazakhstan. In its future the country will need proper funding and support to improve citizens’ access to proper water and sanitation facilities in rural areas.

– Zar-Tashiya Khan

Photo: Flickr