Following the disintegration of the Soviet Union,
Kazakhstan experienced significant restructuring problems
and economic decline. The country has privatized 60 percent
of the state industry and enrolled in the International
Monetary Fund and the World Bank. Kazakhstan has opened up
to moderate market reforms with strong elements of state
governance. A privatization program was adopted in April
1994. More than half of all state property is privatized.
Very often the new owners are based on the old Soviet power
As in the other former Soviet republics, the collapse of
the planning economy has led to a sharp fall in production.
When the common ruble zone collapsed in the fall of 1993,
Kazakhstan introduced its own currency, tenge. Its value
fell in 1994 to one-sixth of its original rate compared to
the Russian ruble. Since 1995 there has been some upturn,
and with rich natural resources including in the form of
metals and petroleum, the outlook is relatively good.
Following the temporary upswing in 1995, the Russian
financial crisis in 1998 had very negative consequences. In
the spring of 1999, the government saw itself forced to
allow the currency to float. Thanks to strong oil exports,
the economy saw a significant upswing from the turn of the
millennium. The economy is still sensitive to fluctuations
in the business cycle in Russia. Large discoveries of oil
and natural gas make the outlook bright in the longer term.
Because of the oil, Kazakhstan has attracted greater foreign
investment per capita than any previous Soviet republic.
However, widespread corruption, complicated bureaucracy and
a poorly developed justice system have deterred foreign
countryaah, the tourism industry is underdeveloped, but in 2001 it
was declared a priority sector. A number of projects were
implemented under the Development Plan for Tourism,
2003-2005. Kazakhstan is at the intersection of Europe and
Asia, with many historical monuments along the Silk Road and
other ancient trade routes. Almaty has the famous ice rink
Medeo, and in the mountains outside is a popular winter
sports resort, Chimbulak.
Mining and energy
Kazakhstan has significant oil and gas reserves, probably
more than 50 billion barrels of oil equivalent. The largest
discovery to date, the Kashagan field in the Caspian Sea,
was made in 2000. It holds 9 to 13 billion barrels of oil,
according to preliminary estimates from the operator. This
may be the largest oil field detected anywhere in the world
since the 1970s. Norwegian Statoil operates exploration
drilling in the Abay field, south of Kashagan on the Kaspi
Another large field, Tengiz, lies just north of the
Caspian Sea. Kazakhstan's breakthrough as an oil exporter
came in 2001 with the opening of a pipeline from Tengiz to
the Russian Black Sea port of Novorossijsk.
Kazakhstan also has huge mineral reserves, and the coal
fields at Karaganda, Turgay, Maykub and Ekibastus were among
the most important in the former Soviet Union. Mining
accounts for 2 per cent of employment.
In 2016, Kazakhstan's electric energy production was 106
TWh. Coal is the major source of energy, accounting for 66.5
percent of electricity produced. Gas power contributed 21
per cent, while 11.5 per cent came from hydropower.
Virtually all state power companies were transformed into
privately owned limited companies in the period 1996–2002.
The Kazakhs have traditionally lived mostly from
livestock, and breeding sheep, goats, pigs and cattle is
still of great economic importance. However, the cultivation
of grain and industrial crops, such as cotton, play a
greater role than animal husbandry, but this agriculture
depends on artificial irrigation. Wheat, barley, rice,
cotton, sugar beets, grapes, fruits, tobacco and vegetables
are grown in irrigated oases. The Black Earth Belt in
northern Kazakhstan is the most important grain cultivation
area, accounting for 10-15 percent of the Soviet Union's
wheat harvest. However, the large-scale increase of the
cultivation area initiated in the 1950s has created serious
ecological problems, including increased soil erosion.
Wheat is still grown on over half of all arable land. By
independence it was said that the state collective
agriculture should be privatized. At the turn of the
millennium, about 90 percent of the state collectives were
transferred to private owners, largely organized as private
collectives or corporations. In 2008, agriculture accounted
for 32.2 per cent of employment and 5.8 per cent of GDP.
In the Caspian Sea, sturgeon is being fished, which
produces "Russian" caviar, but over-taxation threatens the
stock. Until the 1970s fishing was also in the Aral Sea, but
as the sea decreases and the salt content increases, almost
all fish have disappeared. Since the 1970s, the Aral Sea has
shrunk to less than half and the water volume to a quarter.
As a Soviet Republic, Kazakhstan was heavily
industrialized, and the Republic took third place among the
industrial republics of the former USSR. The industry is
dominated by heavy industry based on local raw materials.
Important industrial products include iron and steel
products, metallurgical products, workshop and chemical
products, as well as washing machines and refrigerators.
Most of Kazakhstan's industrial potential is concentrated
around the Karaganda mines in the northeast and the oil
fields on the Caspian Sea. In 2003, the manufacturing
industry accounted for around 10 per cent of employment and
15.9 per cent of GDP.
In 1994, Kyrgyzstan, Uzbekistan and Kazakhstan entered
into an agreement to form a single economic zone. Since
1992, individuals and companies have been able to conduct
foreign trade without the permission of the government, but
goods of 'national interest' such as fuels, minerals,
fertilizers, grains, cotton, wool, caviar and pharmaceutical
products are exempt from this.
Main export goods are commodities; agricultural products,
and since 2001 petroleum products are increasing rapidly.
Kazakhstan's main trading partners are primarily the SUS
countries, but the country also has trade relations with
China and the US, among others.
Transport and Communications
Because of the country's wide reach, there are large
areas that are difficult to access. The railways have played
an important role in the Republic's economic development,
but are best developed in the north-south direction, with no
transverse lines. The railway network is a total of about 13
700 kilometers. The most important lines are the Turksib
route, which links the Central Asian network with the
Trans-Siberian railway via Almaty and Semipalatinsk, and the
Transkasakh line. In 1991, a new international rail link
opened between Drushba (east of Kazakhstan) and Alataw
Shankou in Xinjiang, China. In 1994 an express connection
was established between Almaty and Nukus (Uzbekistan).
Construction of the 100 kilometer railway from Almaty to
Issyk-Kul in Kyrgyzstan began in 2004.
The total road network is approximately 91,563
kilometers, of which about 70 per cent is paved. Kazakhstan
has road links to Russia, Kyrgyzstan, Uzbekistan,
Turkmenistan, Iran and China.
Several private airlines operate alongside the national