2013 Index of Economic Freedom

Kazakhstan

overall score63.0
world rank68
Rule of Law

Property Rights35.0

Freedom From Corruption27.0

Limited Government

Government Spending84.5

Fiscal Freedom93.2

Regulatory Efficiency

Business Freedom71.8

Labor Freedom88.4

Monetary Freedom72.2

Open Markets

Trade Freedom78.2

Investment Freedom30.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 16.7 million
  • GDP (PPP):
    • $216.8 billion
    • 7.5% growth
    • 5.6% 5-year compound annual growth
    • $13,001 per capita
  • Unemployment:
    • 5.4%
  • Inflation (CPI):
    • 8.3%
  • FDI Inflow:
    • $12.9 billion
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Kazakhstan’s economic freedom score is 63.0, making its economy the 68th freest in the 2013 Index. Its score is 0.6 point lower than last year due to declines in half of the 10 economic freedoms including property rights, freedom from corruption, and trade freedom. Kazakhstan ranks 11th out of 41 countries in the Asia–Pacific region, and its overall score is above the world and regional averages.

Kazakhstan’s economy has been recovering steadily since 2009, largely because of increased oil and gas production. Implementation of deeper institutional reforms is critical to strengthen the foundations of economic freedom and secure long-term broad-based economic expansion. Systemic weaknesses persist in the protection of property rights and enforcement of anti-corruption measures. The judicial system is vulnerable to political influence.

State ownership of enterprises has increased, with assets under the control of the National Welfare Fund rising to around 50 percent of the size of the economy. Although large-scale privatization has been planned in two stages for coming years, much remains to be seen. In an attempt to promote diversified economic growth outside the energy sector, regulatory reforms have aimed at streamlining the business start-up process.

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Background

Kazakhstan has been ruled since independence in 1991 by President Nursultan Nazarbayev, who was re-elected with over 95 percent of the vote in April 2011. In January 2012, the ruling Nur Otan party controlled over 80 percent of the seats in parliament. Kazakhstan is the founding member of a customs union with Russia and Belarus that came into effect in July 2010. Oil output is projected to reach 2.1 million barrels a day by 2020. Kazakhstan has an estimated 15 percent of world uranium reserves and remains the world’s largest producer of uranium. Dependence on commodity exports is excessive, but energy and manufacturing have recently shown solid growth. Trade with China is increasingly important. Kazakhstan has an ambitious economic development program, but resource nationalism and corruption deter progress.

Rule of LawView Methodology

Property Rights 35.0 Create a Graph using this measurement

Freedom From Corruption 27.0 Create a Graph using this measurement

The legal framework remains inefficient and subject to political interference. Courts lack the capacity to protect property rights effectively. Infringements on intellectual property rights are rife. Widespread corruption continues to undermine Kazakhstan’s investment reputation. Despite an anti-corruption campaign that has led to high-profile imprisonments, bribery and graft remain commonplace.

Limited GovernmentView Methodology

The flat income tax rate is 10 percent, and the standard corporate tax rate is 20 percent. Other taxes include a value-added tax (VAT) and excise taxes. The overall tax burden amounts to 13.4 percent of total domestic income. Government spending has increased to 22.8 percent of total domestic output. Large oil revenues have kept the budget balance positive, and public debt is only about 11 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business takes six procedures, with no minimum capital required. However, completing licensing requirements takes more than 30 procedures and over 180 days. Labor regulations are relatively flexible, but enforcement of the labor code is erratic. Monetary stability is relatively well maintained, but the government continues to exercise price-control measures. Inflationary pressures continue.

Open MarketsView Methodology

The trade-weighted average tariff rate is 3.4 percent, but import licensing requirements, non-transparent standards, and customs inefficiency add to the cost of trade. Foreign investment is officially welcome, but unclear legal codes, favoritism toward Kazakh companies, and inconsistent application of regulations are deterrents. Troubled banks have been recapitalized, and the financial sector has become largely stabilized.

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 Kong89.3-0.6
2Singapore880.5
3Australia82.6-0.5
4New Zealand81.4-0.7
5Taiwan72.70.8
6Japan71.80.2
7Macau71.7-0.1
8South Korea70.30.4
9Malaysia 66.1-0.3
10Thailand 64.1-0.8
11Kazakhstan63-0.6
12Mongolia61.70.2
13Sri Lanka60.72.4
14Azerbaijan59.70.8
15Kyrgyz Republic 59.6-0.6
16Cambodia58.50.9
17The Philippines58.21.1
18Fiji57.2-0.1
19Samoa57.1-3.4
20Indonesia56.90.5
21Vanuatu56.60.0
22Tonga56-1.0
23India55.20.6
24Pakistan 55.10.4
25Bhutan55-1.6
26Papua New Guinea53.6-0.2
27Tajikistan53.40.0
28Bangladesh 52.6-0.6
29China51.90.7
30Vietnam51-0.3
31Nepal50.40.2
32Micronesia50.1-0.6
33Laos50.10.1
34Maldives49-0.2
35Uzbekistan460.2
36Kiribati45.9-1.0
37Solomon Islands45-1.2
38Timor-Leste43.70.4
39Turkmenistan42.6-1.2
40Burma39.20.5
41North Korea1.50.5
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