Currency Substitution: A Case of Kazakhstan (2000:1-2007:12)

This paper aims to investigate the demand for money in Kazakhstan. This study covers the period starting from 2000:01, when capital liberalization program was launched and National Bank approved managed float regime (National Bank employed adjustable exchange rate regime before exchange rate crisis in Kazakhstan in 1999) to 2007:12 as recent available data for investigation variables. In order to achieve the goal we set demand for money function is estimated using cointegration methodology aimed for variables integrated of order one. The results show important key factors for controlling money demand could be applied by National Bank of Kazakhstan. Besides, there was reversal of currency in Kazakhstan over the period under the investigation.http://deepblue.lib.umich.edu/bitstream/2027.42/64401/1/wp946.pd

CURRENCY SUBSTITUTION: A CASE OF KAZAKHSTAN (2000:1-2007:12)

This paper aims to investigate the demand for money in Kazakhstan. This study covers the period starting from 2000:01, when capital liberalization program was launched and National Bank approved managed float regime (National Bank employed adjustable exchange rate regime before exchange rate crisis in Kazakhstan in 1999) to 2007:12 as recent available data for investigation variables. In order to achieve the goal we set demand for money function is estimated using cointegration methodology aimed for variables integrated of order one. The results show important key factors for controlling money demand could be applied by National Bank of Kazakhstan. Besides, there was reversal of currency in Kazakhstan over the period under the investigation.Demand for money, currency substitution, dollarization, Kazakhstan

Modeling of Social Effect of Foreign Direct Investment in the Regions of Kazakhstan

In this paper, the authors have made an attempt to evaluate the social effect of foreign direct investment (FDI) in the regions of Kazakhstan. For this purpose, the dynamics of FDI for currently operating foreign-invested enterprises and six socio-economic indicators of the regions has been studied for the period 2003?2013 based on the database of the Agency of Statistics of the Republic of Kazakhstan. The experiment involved 16 regions of Kazakhstan (14 regions and 2 cities of republican status: Almaty and Astana). The study was performed using the mathematical apparatus of the “simplified” version of the analytic hierarchy process (AHP) developed by T. Saaty, and the MS Excel program. The developed economic and mathematical model for assessment of the FDI effect on the quality of life and well-being of the population in the regions is hypothetical since it uses expert evaluations of a hypothetical expert. The authors formulated a hypothetic possibility to get the tool for assessment of the social effect of FDI in the regions of Kazakhstan, i.e. the Rating of the regional priority of factors (RPF Rating). The obtained RPF rating has enabled a prioritization of the factors, which determine the quality of life in the regions of the country, and calculation of the cumulative social effect of FDI in Kazakhstan, highlighting the directions of its influence on each of the six factors in a regional context. The study did not reveal the negative impact of FDI on socio-economic development of the regions; moreover, the cumulative social effect of FDI was revealed to be positive for all regions of Kazakhstan. According to the authors, the RPF Rating can be an important tool to enhance the validity of the socio-economic policy in the development of public-private partnerships in the regions of Kazakhstan, as well as to strengthen the positive social effect of FDI in the future. All these will contribute to the long-term growth of the quality of life and well-being of the population in the regions of the Republic

The persistence of media control under consolidated authoritarianism: containing Kazakhstan’s digital media

Citizens of Kazakhstan have greater access to the Internet now than at any time in the past. However, the Nazarbaev regime has systematically cut off the supply of political analysis on the country's web sites while simultaneously shifting popular on-line consumption habits in non-political directions. The result is that the presence of the Internet in Kazakhstan is helping the authoritarian regime remain in power

Is Kazakhstan a Market Economy Yet? Getting warmer….

Transition from planned to a market economy is an evolutionary process. Evolutions do not have finite beginning and ending points. We may look to the beginning of transition in 1991 when the Soviet Union broke up, or we may see it as beginning earlier, when the Soviet Union began to allow its firms to engage in private sales of output that exceeded state plans and to independently take part in international trade agreements. At what point do we say that transition is complete? Hence, it is quite difficult to say when any country begins and completes its transition. The United States and the European Union have categorized Kazakhstan differently with regard to its degree of transition. The United States removed “non market economy” status from Kazakhstan, whereas the EU gave Kazakhstan an intermediate status. The first question that this work asks is how do these political bodies rank a country’s market orientation, and how did they arrive at different conclusions? These results are then compared to what transitional economists have to say on the evolution from a planned to a market economy. The second question is, how do theoretical, academic economists differ in their analysis of the transition process? By creating unique criteria sets from several papers, can one say that, according to any set, Kazakhstan is a market economy? We conclude that the reform process in Kazakhstan is still underway. The government and the economy have experienced many radical reforms, but none completely satisfies the necessary conditions for being categorized as a market economy.http://deepblue.lib.umich.edu/bitstream/2027.42/40059/3/wp673.pd

Is Kazakhstan a Market Economy Yet? Getting warmer….

Transition from planned to a market economy is an evolutionary process. Evolutions do not have finite beginning and ending points. We may look to the beginning of transition in 1991 when the Soviet Union broke up, or we may see it as beginning earlier, when the Soviet Union began to allow its firms to engage in private sales of output that exceeded state plans and to independently take part in international trade agreements. At what point do we say that transition is complete? Hence, it is quite difficult to say when any country begins and completes its transition. The United States and the European Union have categorized Kazakhstan differently with regard to its degree of transition. The United States removed “non market economy” status from Kazakhstan, whereas the EU gave Kazakhstan an intermediate status. The first question that this work asks is how do these political bodies rank a country’s market orientation, and how did they arrive at different conclusions? These results are then compared to what transitional economists have to say on the evolution from a planned to a market economy. The second question is, how do theoretical, academic economists differ in their analysis of the transition process? By creating unique criteria sets from several papers, can one say that, according to any set, Kazakhstan is a market economy? We conclude that the reform process in Kazakhstan is still underway. The government and the economy have experienced many radical reforms, but none completely satisfies the necessary conditions for being categorized as a market economy.Market economy, non-market economy, Kazakhstan, CIS, Kornai, Svejnar

The impact of Kazakhstan accession to the World Trade Organization : a quantitative assessment

In this paper the authors use a computable general equilibrium model of the Kazakhstan economy to assess the impact of accession to the World Trade Organization (WTO), which encompasses (1) improved market access; (2) Kazakhstan tariff reduction; (3) reduction of barriers against entry by multinational service providers; and (4) reform of local content and value-added tax policies confronting multinational firms in the oil sector. They assume that foreign direct investment in business services is necessary for multinationals to compete well with Kazakstan business services providers, but cross-border service provision is also present. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. The authors estimated the ad valorem equivalent of barriers to foreign direct investment based on detailed questionnaires completed by specialized research institutes in Kazakhstan. They estimate that Kazakhstan will gain about 6.7 percent of the value of Kazakhstan consumption in the medium run from WTO accession and up to 17.5 percent in the long run. They estimate that the largest gains to Kazakhstan will derive from liberalization of barriers against multinational service providers, but the other three elements of WTO accession that the authors model all contribute positively to the estimated gains. Piecemeal sensitivity analysis shows that qualitatively the results are robust, but there are four parameters in the model that significantly affect the estimated magnitude of the gains from WTO accession.Economic Theory&Research,Transport Economics Policy&Planning,Free Trade,ICT Policy and Strategies,Investment and Investment Climate

Kazakhstan: Cunning Democracy

Kazakhstan has travelled a long and sometimes difficult road in the years since independence in 1991. From being largely isolated from the world outside the Soviet Union, globalization has taken hold at an increasingly fast pace. Today, numerous international flights bring in still larger numbers of visitors -- be they businessmen, tourists or locals returning from studies or work abroad. The internet age is slowly reaching even the most outlying parts of the country, bringing with it new impulses and perspectives to a young population that grew up after the Soviet era.While the ongoing integration of Central Asia into the global scene involves rapid change on many levels, certain areas are still left behind. It is not unusual for the population to be without electricity and gas during severe winter frosts. Bureaucracy too, retains much of its post-Soviet legacy, as do the attitudes of some government officials and key decision-makers. National economic indicators are not always consistent with the reality of those struggling to get by in the cities and villages dotting Central Asia's vast landscape.As the economic leader of the Central Asian region and the country most strongly tuned in to the global diplomatic and business communities, Kazakhstan carries a particular responsibility to respect, and indeed to promote, human rights and democratic principles.However, while working along an ambitious program for planned future achievements both on the domestic and international arena, Kazakhstan has seen several major steps backwards in the area of human rights over the past two years.Following the tragic events in Zhanaozen in December 2011, when at least 16 strikers were shot and killed by government forces, authorities cracked down on selected opposition leaders such as Vladimir Kozlov of the Alga political party, sentencing him to seven-and-a-half years' imprisonment for his alleged involvement in the strikes. Soon after, the offices of Alga were closed down by authorities, followed by charges of extremism against independent and opposition media outlets, many of which were closed down by court order.As a result, Kazakhstan is currently economically strong, but suffering a bleak media scene, a lack of real political pluralism and a widespread disillusionment as to Kazakhstan's commitment to human rights.The following report summarizes some of our current concerns with regards to freedom of expression, freedom of assembly and freedom of religion or belief. It also brings the perspective of one of Kazakhstan's most respected writers on current affairs, Sergey Duvanov, in a special article for the 2013 Human Dimensions Implementation Meeting in Warszaw. Other texts were prepared by Ivar Dale (NHC) and Viktoria Tyuleneva (FH)

Is Kazakhstan vulnerable to the Dutch disease?

Kazakhstan possesses extensive natural resources reserves that are expected to yield significant export revenues. Since Kazakhstan’s attaining independence in 1991, the composition of exports has changed in favor of energy-related sectors. In the context of such evidence and considerable expected future revenues, many researchers have pointed to the Dutch Disease question. This paper examines whether Kazakhstan is vulnerable to this condition. Using an extended version of the Balassa-Samuelson model including a terms-of-trade effect, we find evidence that changes in the terms of trade had a significant effect on the real exchange rate after 1996, providing evidence of the Dutch Disease. --Dutch Disease,transition,oil,terms of trade,Kazakhstan

WHAT CAUSES BANK ASSET SUBSTITUTION IN KAZAKHSTAN? EXPLAINING CURRENCY SUBSTITUTION IN A TRANSITION ECONOMY

Dollarization comes in several forms. The type that this paper examines is asset substitution, when savers hold dollar assets in bank accounts, instead of local currency. It is limited to the transition economy of Kazakhstan. This paper estimates demand for dollar accounts and shows that avoidance of inflation risk, rather than avoidance of exchange rate devaluation of savings, is the most important in explaining dollarization. This result is unexpected. This study examines data from Kazakhstan. Kazakhstan is seen as having a strong banking system and a healthy economy for a former Soviet Republic. It is seen as one of the most market-oriented, FSU countries. However, Kazakhstan also has a large demand for a means of storing savings in dollars, rather than in the local currency. This is particularly curious, when the local currency is appreciating relative to the U.S. dollar. This demand in less prosperous FSU countries is likely to be even greater. The paper combines data and statistical methods with anecdotal information in order to improve our understanding of a paradoxical occurrence.