The Transition in Kazakhstan - From Command to Market Economy

In the wake of the dissolution of the Soviet Union the newly independent state of Kazakhstan launched reforms aiming at dismantling the command economy and developing a market economy integrated into the world economy. The reform programme was relatively rapid and comprehensive and inspired by the ‘shock therapy’ philosophy that dominated in the early 1990s. Initially the reforms succeeded in liberalising and privatising the economy, but not stabilising it. The first years of independence were characterised by a steep decline in output and hyperinflation. The economic situation changed in 1995 and except for an economic downturn connected to the Russian financial crisis in 1998 the economy has steadily improved ever since. Kazakhstan has experienced an impressive growth based on a surge in export of natural resources since 2000. The transition has been a success in terms of privatisation and macroeconomic development and the radical consequent path had positive economic effects with time. However, it is hazardous to directly connect the growth of the 21st century to the reform programme. The exploration of newly discovered oil and gas fields as well as high world-market prices of these commodities might have been more determinant factors. Furthermore, the social outcome has been negative, although improving since 2000, and no democracy has evolved. Despite improvements the heavy reliance on natural resources still makes the economy vulnerable to exogenous shocks.