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The Political Economy of Kazakhstan: A Case of Good Economics, Bad Politics?

Author

Listed:
  • Commander, Simon

    (IE Business School, Altura Partners)

  • Prieskienyte, Ruta

    (University of Bath)

Abstract

Can autocracies and their associated institutions successfully implement economic policies that promote growth and investment? Can 'good economics' somehow offset the effects of 'bad' politics? Kazakhstan is a case where an autocratic regime has actively projected market-friendly policies and attracted significant amounts of incoming investment. These policies are to some extent reflected in the country's governance ratings, although there has been a significant amount of investment disputes that question the attachment to the rule of law. Moreover, the political regime remains strongly personalized around the founder President, his family and associates. This is reflected in the economics of the autocracy whereby a large public sector and a set of privately held businesses coexist to mutual benefit. The latter have been formed around a very small number of highly connected individuals whose initial accumulation of assets allows them also to act as necessary gatekeepers for entrants. Competition as a result remains limited in both economic and political domains. Yet, uncertainties over the future leadership, along with latent rivalry over access to resources and markets, make the political equilibrium quite fragile. In short, 'bad' politics both squeezes the space for, and distorts the benefits from, 'good' economics.

Suggested Citation

  • Commander, Simon & Prieskienyte, Ruta, 2021. "The Political Economy of Kazakhstan: A Case of Good Economics, Bad Politics?," IZA Discussion Papers 14554, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14554
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    Cited by:

    1. Richard Pomfret, 2023. "What did those who were “Present at the Transition” Miss? The Creation of Powerful Presidential Families in Central Asia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(3), pages 442-460, September.

    More about this item

    Keywords

    political networks; autocracy; investment;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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