2016 Index of Economic Freedom

Kazakhstan

overall score63.6
world rank68
Rule of Law

Property Rights30.0

Freedom From Corruption29.0

Limited Government

Government Spending87.7

Fiscal Freedom93.0

Regulatory Efficiency

Business Freedom72.3

Labor Freedom82.7

Monetary Freedom74.0

Open Markets

Trade Freedom77.4

Investment Freedom40.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 17.4 million
  • GDP (PPP):
    • $418.5 billion
    • 4.3% growth
    • 6.0% 5-year compound annual growth
    • $24,020 per capita
  • Unemployment:
    • 4.1%
  • Inflation (CPI):
    • 6.7%
  • FDI Inflow:
    • $9.6 billion
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Kazakhstan is Central Asia’s largest economy. Although large-scale privatizations have been promised for the coming years, progress in implementing such reforms remains to be seen. In an attempt to promote diversified economic growth, regulatory reforms have aimed at streamlining the business start-up process. Diversification of the economy and the need to lower dependence on hydrocarbon exports remain significant challenges.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 63.6 (up 0.3 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 68th
  • Regional Ranking: 12th in the Asia–Pacific Region
  • Notable Successes: Trade Freedom and Management of Public Finance
  • Concerns: Property Rights and Corruption
  • Overall Score Change Since 2012: No Change

Implementation of deeper institutional reforms remains critical to securing sustainable long-term and broad-based economic expansion. Systemic weaknesses persist in the protection of property rights and enforcement of anti-corruption measures. Lacking transparency, the judicial system is vulnerable to political influence.

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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. Production in the giant Kashagan oil field off the northern shore of the Caspian Sea is expected to begin by 2016 and could help Kazakhstan extract 3 million barrels per day by 2030. Kazakhstan is also the world’s largest producer of uranium.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 29.0 Create a Graph using this measurement

Corruption is widespread at all levels of government. As of January 2015, a new criminal code strengthened penalties for accepting and giving bribes. The judiciary is constitutionally subservient to the executive branch, judges are subject to political bias, and corruption is evident throughout the judicial system. In 2014, new procedures made property transfer and registration easier, but property rights are not protected effectively.

Limited GovernmentView 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 14 percent of total domestic income. Government spending accounts for 20.2 percent of total domestic output. Large oil revenues have kept the budget balanced, and public debt is about 15 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business takes six procedures, and no minimum capital is required, but completing licensing requirements can be burdensome. Labor regulations are relatively flexible, but enforcement of the labor code is erratic. In 2015, the government tried to resist a sharp currency devaluation, and newly reelected President Nursultan Nazarbayev included in his latest reform program a pledge to reduce electricity subsidies.

Open MarketsView Methodology

Kazakhstan’s average tariff rate is 3.8 percent. Kazakhstan was approved to be the 162nd member of the World Trade Organization in 2015. Local content requirements and sectoral barriers impede foreign investment. Troubled banks have been recapitalized, and the financial sector has become largely stabilized. However, the number of non-performing loans remains high, concentrated mostly in three banks.

Country's Score Over Time

Bar Graph of Kazakhstan Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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