2018 Index of Economic Freedom

Kazakhstan

overall score69.1
world rank41
Rule of Law

Property Rights56.0

Government Integrity44.6

Judicial Effectiveness58.1

Government Size

Government Spending85.3

Tax Burden92.6

Fiscal Health87.3

Regulatory Efficiency

Business Freedom74.3

Labor Freedom86.8

Monetary Freedom68.2

Open Markets

Trade Freedom75.6

Investment Freedom50.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 17.9 million
  • GDP (PPP):
    • $451.3 billion
    • 1.2% growth
    • 3.5% 5-year compound annual growth
    • $25,145 per capita
  • Unemployment:
    • 5.2%
  • Inflation (CPI):
    • 14.6%
  • FDI Inflow:
    • $9.1 billion
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Kazakhstan’s economic freedom score is 69.1, making its economy the 41st freest in the 2018 Index. Its overall score has increased by 0.1 point, with significant improvements in investment freedom and government integrity offsetting steep declines in fiscal health and monetary freedom. Kazakhstan is ranked 11th among 43 countries in the Asia–Pacific region, and its overall score is above the regional and world averages.

Kazakhstan’s government is well aware that the economy is overly reliant on oil and extractive industries, but initial attempts to open such sectors as transport, pharmaceuticals, telecommunications, petrochemicals, and food processing to greater development and investment have been uneven. Notwithstanding some positive changes, investors remain concerned about corruption, bureaucracy, and arbitrary law enforcement, especially at the regional and municipal levels. An additional concern is the banking sector, which suffers from low liquidity, poor asset quality, and a lack of transparency.

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Background

Kazakhstan was the largest of the Soviet republics after Russia itself. President Nursultan Nazarbayev began his rule in 1989 during the Soviet era and won a sixth five-year term in 2015 against marginalized opposition. The lack of a succession plan creates longer-term uncertainty. Kazakhstan joined the Eurasian Economic Union, which includes Russia and Belarus, in 2015. In 2017, the government took a modest first step toward democratic reform and constitutional change by shifting some authority from the president to the prime minister and parliament. Vast hydrocarbon and mineral reserves, especially in the Caspian Basin, form the backbone of the economy. Kazakhstan is the world’s largest producer of uranium and also has a large agricultural sector that features livestock and grain.

Rule of LawView Methodology

Property Rights 56.0 Create a Graph using this measurement

Government Integrity 44.6 Create a Graph using this measurement

Judicial Effectiveness 58.1 Create a Graph using this measurement

Secured interests in property are recognized in law. Although the government has improved the enforcement of contracts and has simplified property registration, property rights are not fully protected. Judges are subject to political bias. Corruption is not only evident in the judicial system, but also widespread throughout the government. Those who are in positions of authority are able to act with impunity.

Government SizeView Methodology

The flat personal income tax rate is 10 percent, and the standard corporate tax rate is 20 percent. The overall tax burden equals 15.6 percent of total domestic income. Over the past three years, government spending has amounted to 22.2 percent of total output (GDP), and budget deficits have averaged 2.7 percent of GDP. Public debt is equivalent to 21.1 percent of GDP.

Regulatory EfficiencyView Methodology

In 2016, Kazakhstan simplified the process for starting a business. Dealing with construction permits, getting electricity, minority investor protections, exporting, enforcement of contracts, and resolution of insolvency were improved, and labor regulations were made more flexible. The government also removed price controls on diesel in 2016. In 2017, however, it started a subsidy program for mortgage loans.

Open MarketsView Methodology

Trade is significant for Kazakhstan’s economy; the combined value of exports and imports equals 62 percent of GDP. The average applied tariff rate is 4.7 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average. Troubled banks have been recapitalized, and the financial sector is largely stabilized, but the number of nonperforming loans remains high, concentrated mostly in three banks.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong90.20.4
2Singapore88.80.2
3New Zealand84.20.5
4Australia80.9-0.1
5Taiwan76.60.1
6Malaysia 74.50.7
7South Korea73.8-0.5
8Japan72.32.7
9Macau70.90.2
10Vanuatu69.52.1
11Kazakhstan69.10.1
12Thailand 67.10.9
13Philippines65-0.6
14Azerbaijan64.30.7
15Indonesia64.22.3
16Brunei Darussalam64.2-5.6
17Tonga63.10.1
18Kyrgyz Republic 62.81.7
19Fiji62-1.4
20Bhutan61.83.4
21Samoa61.53.1
22Cambodia58.7-0.8
23Tajikistan58.30.1
24China57.80.4
25Sri Lanka57.80.4
26Solomon Islands57.52.5
27Mongolia55.70.9
28Papua New Guinea55.74.8
29Bangladesh 55.10.1
30India54.51.9
31Pakistan 54.41.6
32Nepal54.1-1.0
33Burma53.91.4
34Laos53.6-0.4
35Vietnam53.10.7
36Micronesia52.3-1.8
37Uzbekistan51.5-0.8
38Afghanistan51.32.4
39Maldives51.10.8
40Kiribati50.8-0.1
41Timor-Leste48.11.8
42Turkmenistan47.1-0.3
43North Korea5.80.9
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