2017 Index of Economic Freedom

Kazakhstan

overall score69.0
world rank42
Rule of Law

Property Rights56.1

Government Integrity38.0

Judicial Effectiveness56.5

Government Size

Government Spending85.7

Tax Burden93.3

Fiscal Health98.9

Regulatory Efficiency

Business Freedom74.5

Labor Freedom82.5

Monetary Freedom73.9

Open Markets

Trade Freedom78.5

Investment Freedom40.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 17.7 million
  • GDP (PPP):
    • $429.1 billion
    • 1.2% growth
    • 4.8% 5-year compound annual growth
    • $24,268 per capita
  • Unemployment:
    • 5.6%
  • Inflation (CPI):
    • 6.5%
  • FDI Inflow:
    • $4.0 billion
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Kazakhstan’s economy has benefited substantially from increased openness and flexibility over the past decade. Although the state continues to maintain its ownership in key enterprises, particularly in the energy sector, the economy is mostly in private hands, and more privatization is being sought. Beneficial structural reforms have included bank privatization, implementation of competitive flat tax rates, and modernization of the trade regime.

Deeper institutional reforms to reduce barriers to investment and increase the efficiency of the judiciary are critical to further success. Despite measures to expand the non-energy sector, the overall regulatory framework needs to be more streamlined to enhance competitiveness.

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Background

President Nursultan Nazarbayev, whose rule began in 1989 when Kazakhstan was still a Soviet republic, won a sixth five-year term in 2015. The opposition is marginalized, and the lack of a succession plan creates longer-term political uncertainty. Kazakhstan joined the Eurasian Economic Union, which includes Russia and Belarus, on January 1, 2015. The past year has been tumultuous for Kazakhstan. In April 2016, there were widespread protests against government land-reform plans. In June, a terrorist attack in the northwestern city of Aqtobe left 28 people dead. Modernization of the Atyrau, Shymkent, and Pavlodar refineries is due to be completed in 2018. Kazakhstan is also the world’s largest producer of uranium.

Rule of LawView Methodology

Property Rights 56.1 Create a Graph using this measurement

Government Integrity 38.0 Create a Graph using this measurement

Judicial Effectiveness 56.5 Create a Graph using this measurement

Property rights are not protected effectively, although the government has made enforcement of contracts easier by introducing a simplified fast-track procedure for small claims. Judges are subject to political influence, and bias is evident throughout the judicial system. Corruption is widespread, and those in positions of authority and individuals with ties to government or law enforcement officials may act with impunity.

Government SizeView Methodology

The flat personal income tax rate is 10 percent, and the standard corporate tax rate is 20 percent. Other taxes include a value-added tax and excise taxes. The overall tax burden equals 13.2 percent of total domestic income. Government spending has amounted to 21.8 percent of total output (GDP) over the past three years, and budget surpluses have averaged 0.5 percent of GDP. Public debt is equivalent to 23.3 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory framework has undergone a series of reforms. The private sector now faces fewer constraints, although there is still much room for institutional reform. Labor regulations are relatively flexible, facilitating the development of a more dynamic labor market. Kazakhstan is subsidizing renewable energy with the goal of having 10 percent of its needs met by renewables by 2030.

Open MarketsView Methodology

Trade is important to Kazakhstan’s economy; the value of exports and imports taken together equals 53 percent of GDP. The average applied tariff rate is 3.3 percent. Foreign investment in some sectors of the economy is restricted, and state-owned enterprises distort the economy. The state has been providing additional support to the banking sector since 2014. The number of nonperforming loans continues to be high.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
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