The Kazakstani Economy

The collapse of the communist states and the relinquishing of communist ideologies has resulted in the Commonwealth of Independent States (CIS) searching for new relationships between the state and the market. Central planning failed to achieve the economic and social developments expected of it, and the market economy is viewed by many as the answer to the perceived failures of socialism. Although the ending of political control by the communist parties was abrupt, the manner in which economies have reacted and adjusted to the changes has varied significantly. The balance between adopting market oriented reforms and formally relinquishing socialism has been uneven and, in some instances, paradoxical. It is becoming increasingly evident that the experiences under central planning and the outcome of reforms are going to be mixed. The types of economic strategies and planning introduced in the different economies and the relations to the Soviet Union have vitally influenced the pattern of development in subsequent years.

The introduction of Perestroika in the FSU introduced inertia into the hitherto organised scheme. In real terms, the legislative enactment of Perestroika was the replacement of a policy designed for the longer term with short term measures.

The political leadership crisis in the spring of 1991 exerted a negative influence upon the process of economic transformation in the USSR. The government of the USSR did not properly manage any of the programmes of reform. The coup attempt in August collapsed the fundamental structure of the Soviet Union and resulted in its dissolution. Having considered the historical conditions from which new countries emerged, we now turn our attention to the collapse of the Soviet Union, which created new ‘Independent’ States. The Kazakstani Parliament had announced the independence of Kazakstan on 16 December 1991, and Nursultan Nazarbayev was elected the President of Kazakstan.

By the autumn of 1993¹ the Government of Kazakstan was faced with the very serious problem of the introduction of a new national currency. Although by some people it was considered a panacea for the crisis, generally the Kazakstani population realised that the real crisis was still in the future. The time for paying for independence would come soon, and in such a situation it would be impossible to blame the Russian or any other government for the unsuccessful method of transition. Nevertheless, the devaluation of the new national currency began very soon after its introduction, which of course demonstrated that the government was still very weak in terms of economic policy, and did not have clear and coherent relations with the National Bank of Kazakstan. The government was still uncertain as to what was necessary in terms of inter-enterprise arrears, and that it is necessary to conduct restructuring after a privatisation process.

The process of privatisation is not an easy one for any country, and this process is particularly difficult in a period of transition. When the state form of ownership has existed for a long time the difficulties with transformation include changing the fundamental ethos of the population as a whole, as well as the adoption of the key principles of private ownership (by the state).

The Kazakstani government tried to put all economic reforms into order, and made some progress in the expression of its strategy. The 1996–98 Action Programme for the Deepening Reforms better covered all the dimensions of economic reforms.

The transformation of the economy requires the creation of new dimensions of economic activity. New strength in the development of small businesses is an historically original concept for Kazakstan.

What is the nature of the transition in Kazakstan? Kazakstan has reconsidered its own system, priorities and future. This has also led to reconsideration of Kazakstan’ s relationship with neighbours and other countries. The pragmatic concerns of world society and the interdependence of new national economies have led economic systems in differing directions. Certainly the last decade has provided some lessons for Kazakstan, and the next generation will judge in which period the economy of Kazakstan gained the most — before or during transition. This is a concluding chapter, and cannot answer such a complicated question, in fact it is fair to say it is too early to reach conclusions. Nevertheless there are some dimensions which should be emphasised.