However, the government responded to the crisis by implementing various measures to stabilize the economy. The government obtained loans from international financial institutions, and the central bank implemented measures to stabilize the currency. According to World Bank (2018), the government also implemented a structural reform program, including the privatization of state-owned enterprises, restructuring of the banking sector, and strengthening of macroeconomic management.

The Oil Boom (2000s)

The 2000s were a period of significant economic growth for Kazakhstan, primarily driven by the oil and gas industry. The government invested heavily in exploring and producing oil and gas, attracting major global energy companies to invest in the sector. As a result, oil production increased from 400,000 barrels per day in 1998 to 1.7 million barrels in 2013.

However, the oil boom also highlighted the need for diversification. The government recognized the importance of diversifying the economy beyond the oil and gas sector, and hence, initiated various measures to promote economic diversification. According to Kanashayev (2017), these measures included strengthening institutional capacity, promoting innovation, and investing in education and infrastructure. These measures aimed to create an enabling environment for private sector development and attract foreign investment in non-oil sectors.

Conclusion

The process of economic development in Kazakhstan has been marked by various challenges and opportunities. The market-oriented reforms introduced in the early years of independence laid the foundation for further economic development. The economic crisis of 1996-2001 highlighted the vulnerability of the economy to external shocks and demonstrated the need for structural reforms. The oil boom of the 2000s led to significant economic growth but also emphasized the importance of diversification. Overall, Kazakhstan's pursuit of sustainable economic development remains an ongoing process, and the government continues to implement various measures to achieve this goal.

The Kazakhstani economy faced social costs, including job losses and a decline in social services, despite its success in stabilizing the economy. The economic crisis of 1996-2001 revealed the country's vulnerability to external shocks, especially fluctuations in oil prices. It showed the need for diversification of the economy and reduction of dependence on the extractive sector. Kazakhstani government realized the need for structural reforms and sustainable economic model, as argued by Wandel and Kozbagarova (2009).

Following an oil boom (2000-2014), Kazakhstan saw a rise in oil exports that significantly increased its GDP. The country boasts of some of the largest oil reserves in the world, and its oil production increased from 36 million tonnes in 2000 to 81 million tonnes in 2013 (Pomfret, 2005). The surge in oil exports led to an increase in government revenue, enabling investments in infrastructure, education, and social welfare programs. However, the government's over-dependence on oil exports exposed the economy to fluctuations in the global oil market.

To attract foreign investment and diversify the economy, the Kazakhstani government implemented several reforms during the oil boom. It created special economic zones, tax incentives, and legal reforms, enhancing the business climate (Wandel & Kozbagarova, 2009), which led to more foreign direct investments, thus spurring economic growth. However, the lack of diversification made the economy vulnerable to fluctuations in oil prices, which led to a sharp drop in government revenue during the global financial crisis of 2008. This resulted in inflation and reduced consumer purchasing power (Hindley, 2008).

The Kazakhstani government acted promptly by implementing economic reforms such as investment in infrastructure improving transport and communication networks, promoting entrepreneurship, and creating special economic zones for SMEs (Bendini, 2013). These measures aimed to reduce over-dependence on oil exports and promote economic diversification.

In conclusion, Kazakhstan has undergone an economic transformation with countless challenges since its independence in 1991. Despite an economic crisis, political instability, and over-reliance on oil exports, the Kazakhstani government's implementation of economic reforms has led to substantial growth, promoting stability and prosperity in the region.

References:

Bendini, R. (2013). Doing business in Kazakhstan. Milan: InfoReg.

Hindley, B. (2008). Economy of Kazakhstan: An overview. In Kazakhstan and the World Economy: An assessment of Kazakhstan's trade policy and pending accession to the WTO (pp. 6-11). European Centre for International Political Economy.

Kanashayev, D.E. (2017). Kazakhstani economy since its independence: Main challenges and potential for development. The Journal of Economic Research & Business Administration.

Pomfret, R. (2005, September). Kazakhstan's economy since independence: Does the oil boom offer a second chance for sustainable development? Europe-Asia Studies, 57(6), 859-876.

Wandel, J & Kozbagarova, B. (2009). Kazakhstan: Economic transformation and autocratic power. SSRN Electronic Journal.

In 2013, Roberto Bendini produced a manuscript titled "Kazakhstan: Selected Trade and Economic Issues". The document is available in English and covers a range of topics related to trade and economics in Kazakhstan. It provides valuable insights into the economic landscape of the country and highlights areas of potential growth and development. The manuscript could prove beneficial for individuals or organizations seeking to expand their knowledge of Kazakhstan's economy and trade policies.