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Why has Kazakhstan become the economic giant of Central Asia? What is the secret behind it?
Kazakhstan, with its vast geographical and resource advantages, has become an economic giant in Central Asia. As a post-Soviet country, Kazakhstan's economy has undergone tremendous changes over the past few decades, moving from its traditional reliance on heavy industry to diversified resource development, especially energy and agriculture. So, how did all this happen?
As of 2023, Kazakhstan has attracted more than $370 billion in foreign investment since independence, making it a major economic force in Central Asia.
Kazakhstan has rich reserves of oil and natural gas, and nearly all known elements on the periodic table can be found on its soil. At the same time, its vast grasslands provide excellent conditions for livestock and grain production, while the mountainous areas in the south are an important growing area for wild apples and walnuts. The development and processing of these natural resources constitute the industrial base of Kazakhstan and also provide support for economic growth.
Since the collapse of the Soviet Union in 1991, Kazakhstan's economy has declined sharply due to a collapse in demand for heavy industry, with the worst year being 1994. Subsequently, the government promoted economic reforms and privatization between 1995 and 1997, and obtained the "market economy" status from the European Union and the United States in 2000 and 2002 respectively, marking the beginning of its transformation.
Kazakhstan's oil export potential increased significantly with the signing of the Kasbi Pipeline Alliance Agreement in 1996, and subsequent oil price fluctuations have had a key impact on economic growth.
Although Kazakhstan's economy suffered another setback in 1998 due to falling oil prices and the Russian economic crisis, the country's economy gradually recovered with the rebound in international oil prices in 1999 and a reliable grain harvest. Kazakhstan's economic growth has been strong in the 2000s, particularly as global demand for its main exports - oil, metals and grains - has risen.
According to the World Bank report, Kazakhstan's forecast for 2023 indicates that real GDP will grow by 3.5%, while in 2024 it may reach 4%, mainly due to the performance of the hydrocarbon sector. By this time, Kazakhstan's economy had emerged from its early difficulties and was showing potential for steady growth.
According to the 2023 Economic Freedom Index, Kazakhstan's economic freedom score is 62.1, ranking 71st out of 176 countries, showing its friendliness towards foreign investment and the gradual improvement of the market environment.
It is worth noting that Kazakhstan also performs very well in the Global Innovation Index! It ranked third in the Central and South Asia region in 2018, reflecting its efforts in technological innovation and economic diversification. The government's initiatives to promote economic diversification, such as supporting small and medium-sized enterprises and attracting foreign investment, have a direct impact on the competitiveness of the overall economy.
Recently, Kazakh President Kashin-Jomart Tokayev proposed a series of economic reform plans, emphasizing the development of industrialization and green energy. The introduction of these reform measures will undoubtedly further consolidate Kazakhstan's position as an economic hub in Central Asia.
In his 2023 State of the Nation Address, Tokayev stressed the government's commitment to simplifying the tax system, increasing transparency, and supporting sustainable development.
These forward-looking policies will help promote Kazakhstan's active role in the global economy, especially in attracting more foreign investment and further developing non-traditional industries. With its emphasis on future technologies, can Kazakhstan play a key role in the global economic network? This undoubtedly deserves our further attention and reflection.
