2014 Index of Economic Freedom

Kazakhstan

overall score63.7
world rank67
Rule of Law

Property Rights30.0

Freedom From Corruption25.7

Limited Government

Government Spending85.0

Fiscal Freedom92.9

Regulatory Efficiency

Business Freedom74.4

Labor Freedom86.7

Monetary Freedom74.4

Open Markets

Trade Freedom78.2

Investment Freedom40.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 16.7 million
  • GDP (PPP):
    • $231.8 billion
    • 5.0% growth
    • 4.8% 5-year compound annual growth
    • $13,893 per capita
  • Unemployment:
    • 5.4%
  • Inflation (CPI):
    • 5.1%
  • FDI Inflow:
    • $14.0 billion
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Kazakhstan’s economic freedom score is 63.7, making its economy the 67th freest in the 2014 Index. Its score is 0.7 point higher than last year, with notable improvements in investment freedom, business freedom, and monetary freedom partially counterbalanced by deterioration in the rule of law as measured by property rights and freedom from corruption. Kazakhstan ranks 11th out of 42 countries in the Asia–Pacific region, and its overall score is above the world and regional averages.

Over the 17 years that Kazakhstan has been graded in the Index, its economic freedom has advanced by 22 points, one of the 20 best improvements recorded by any country. This increase has been facilitated especially by improvements in regulatory efficiency and market openness. Scores for seven of the 10 economic freedoms, including monetary freedom, trade freedom, financial freedom, fiscal freedom, and business freedom, have increased by double digits. Once considered a “repressed” economy, Kazakhstan has risen to “moderately free” since 2008.

Looking ahead, deeper structural reforms will be critical in overcoming challenges associated with the need to reduce dependence on the energy sector and achieve more diversified growth. Property rights and freedom from corruption remain far below average world levels.

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Background

Kazakhstan is a founding member of the Customs Union with Russia and Belarus and plans to join the Eurasian Union in 2015. President Nursultan Nazarbayev won a fifth five-year term with over 95.5 percent of the vote in 2011, and his Nur Otan party holds 80.7 percent of the seats in parliament. In June 2013, Kazakhstan reached out to Uzbekistan in an effort to defuse tensions over disputed segments of the border and water rights. Oil production is projected to reach 3 million barrels per day by 2030. Kazakhstan is also the world’s largest producer of uranium. There is heavy dependence on commodity exports, but manufacturing also has shown solid growth, as has trade with China.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 25.7 Create a Graph using this measurement

Corruption, bribery, and graft are widespread at all levels of government as evidenced by several high-profile cases in the past year. The judiciary is constitutionally subservient to the executive branch. Judges are subject to political bias, and corruption pervades the judicial system. Courts cannot protect property rights effectively, and infringements of intellectual property rights are rife.

Limited GovernmentView Methodology

The individual income tax rate is a flat 10 percent, and the corporate tax rate is 20 percent. Other taxes include a value-added tax (VAT) and excise taxes. The overall tax burden is 14.6 percent of gross domestic income. Government expenditures make up 22 percent of the domestic economy. Large oil reserves help to boost public accounts, keeping public debt low at about 12 percent of GDP.

Regulatory EfficiencyView Methodology

Incorporating a business takes six procedures, with no minimum capital required. However, completing licensing requirements takes almost four months. Labor regulations are relatively flexible. The non-salary cost of employing a worker is moderate, and dismissing an employee is not costly. Regulations on work hours can be rigid. Monetary stability is well maintained, but the government subsidizes agriculture and imposes price control measures on fuel.

Open MarketsView Methodology

The average tariff rate is 3.4 percent. It is costly and time-consuming to import goods. Foreign investors sometimes find it difficult to navigate the legal and regulatory systems. The financial sector has experienced deeper reforms than other areas of the economy. However, capital markets remain underdeveloped, although the bond market has been growing. Troubled banks have been recapitalized.

Country's Score Over Time

Bar Graph of Kazakhstan Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Kazakhstan to other economic country groups

Regional Ranking

rank country overall change
1Hong Kong90.10.8
2Singapore89.41.4
3Australia82-0.6
4New Zealand81.2-0.2
5Taiwan73.91.2
6Japan72.40.6
7Macau71.3-0.4
8South Korea71.20.9
9Malaysia 69.63.5
10Kazakhstan63.70.7
11Thailand 63.3-0.8
12Azerbaijan61.31.6
13Samoa61.14.0
14Kyrgyz Republic 61.11.5
15The Philippines60.11.9
16Sri Lanka60-0.7
17Vanuatu59.52.9
18Mongolia58.9-2.8
19Fiji58.71.5
20Indonesia58.51.6
21Tonga58.22.2
22Cambodia57.4-1.1
23Bhutan56.71.7
24India55.70.5
25Pakistan 55.20.1
26Bangladesh 54.11.5
27Papua New Guinea53.90.3
28China52.50.6
29Tajikistan52-1.4
30Laos51.21.1
31Maldives512.0
32Vietnam50.8-0.2
33Nepal50.1-0.3
34Micronesia49.8-0.3
35Burma46.57.3
36Uzbekistan46.50.5
37Kiribati46.30.4
38Solomon Islands46.21.2
39Timor-Leste43.2-0.5
40Turkmenistan42.2-0.4
41North Korea1-0.5
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