Diversification of the Kazakhstan Economy through Global Value Chains: A Quantitative Assessment

Kazakhstan’s economy remains dependent on the extractive sector, which poses risks of instability due to fluctuations in global commodity prices. In the context of globalization, the integration of the manufacturing industry into global value chains (hereinafter referred to as GVCs) is becoming an urgent task that will increase the competitiveness of the national economy. The purpose of this study is to quantify the potential of the manufacturing sector and assess the relationship between indicators of GVCs and main indicators of economic growth. Statistical data from the Bureau of National Statistics of Kazakhstan and international rating organizations like the OECD, Asian Development Bank, and Islamic Development Bank were used for this study. Regression modeling, reliability analysis using Cronbach’s alpha, and analysis of variance were used to analyze quantitative data. The results showed that the volume of non-primary exports had a statistically significant impact on GDP (p<0.05) and labor productivity (p< 0.01), but the share of manufacturing in the economy remained low and the process of export diversification and integration into global supply chains was slow. This study highlights the need for active government policies in the development of the manufacturing sector, attracting investment in non-resource industries, and deepening participation in GVCs. The findings can be used to formulate industrial policy strategies to reduce dependence on raw materials and create sustainable conditions for economic growth. Promising areas for further research include the analysis of factors affecting investments in non-primary products, the study of structural reforms in the manufacturing industry, and the assessment of government support’s impact on the development of the non-primary sector.

1. Agumbayeva, A., Chmyshenko, E., & Abdirov, Y. (2019). Impact of the new industrialization on innovational development of production in Kazakhstan. Proceedings of the 2nd International Scientific Conference on New Industrialization: Global, National, Regional Dimension. https://doi.org/10.2991/SICNI-18.2019.129

2. Alibekova G.Zh., Edgenov B.M., Kozhahmetova A.K., & Mynbaeva E.N. (2024). Оценка факторов коммерциализации результатов научных исследований в Республике Казахстан [Evaluation of factors of commercialization of scientific research results in the Republic of Kazakhstan]. Economy: strategy and practice, 9(2), 41-57. https://doi.org/10.51176/1997-9967-2024-2-41-57 (in Russ.)

3. Antonakakis, N., Cuñado, J., Filis, G., & Perez de Gracia, F. (2017). Oil dependence, quality of political institutions and economic growth: A panel VAR approach. Resources Policy, 53, 147- http://dx.doi.org/10.1016/j.resourpol.2017.06.005

4. Anderson, K., Capannelli, G., Ginting, E., Rosbach, K., & Taniguchi, K. (2018). The Kazakhstan economy: Achievements, prospects, and policy changes. Asian Development Bank. http://dx.doi.org/10.22617/TCS189413-2

5. Bamber, P., & Fernandez-Stark, K. (2013). Global Value Chains, Economic Upgrading and Gender: The Horticulture Industry. In C. Staritz & J. G. Reis (Eds.), Global Value Chains, Economic Upgrading and Gender: Case Studies of the Horticulture, Tourism, and Call Center Industries. Washington, D.C.: World Bank.

6. Barrientos, S. (2013). Labour chains: Analyzing the role of labour contractors in global production networks. The Journal of Development Studies, 49(8), 1058-1071. http://dx.doi.org/10.1080/00220388.2013.780040

7. Bureau of National Statistics. (2024). Bureau of National Statistics of the Republic of Kazakhstan. Retrieved January 19, 2025 from https://stat.gov.kz/en

8. Cantore, N., Clara, M., Lavopa, A., & Soare, S. (2017). Manufacturing as an engine of growth: Which is the best fuel? Structural Change and Economic Dynamics, 42, 56-66. https://doi.org/10.1016/j.strueco.2017.04.004

9. Caselli, F., Koren, M., Lisicky, M., & Tenreyro, S. (2020). Diversification Through Trade. The Quarterly Journal of Economics, 135, 449–502. https://doi.org/10.1093/qje/qjz028

10. Cherif, R., Hasanov, F., & Sarsenbayev, M. (2024). Call of Duty: Industrial Policy for the Post-Oil Era. IMF Working Paper, 24-74.

11. Delechat, C. (2024). Economic Diversification in Developing Countries. Departmental Papers. https://doi.org/10.5089/9798400240201.087

12. Gereffi, C., & Fernandez-Stark, K. (2011). Gloval value chain analysis: a primer. Duke University.

13. Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78-104. https://doi.org/10.1080/09692290500049805

14. Guha-Khasnobis, B., & Aditya, A. (2024). Export Diversification, Quality and Global Value Chain: A Cross-country Analysis. Journal of International Commerce, Economics and Policy, 15(3), 2450021. https://doi.org/10.1142/s1793993324500212

15. Isatayeva, G., Seitova, V., Koptayeva, G., Turlybekova, A., & Mutaliyeva, A. (2019). Financing of young knowledge-based companies after the financial crisis: the case of Kazakhstan. Entrepreneurship and Sustainability Issues, 6(3), 1226-1234. http://doi.org/10.9770/jesi.2019.6.3(12)

16. Isataeva, G.B., Sejtbekova, S.T., & Sejtova, V.N. (2024). Влияние прямых иностранных инвестиций на экономический рост Казахстана [The Impact of Foreign Direct Investment on Economic Growth in Kazakhstan]. Central Asian Economic Review, 4, 133-145. https://doi.org/10.52821/2789-4401-2024-4-133-145 (in Russ.)

17. Johnson, R. (2017). Measuring Global Value Chains. NBER Working Paper Series. https://doi.org/10.3386/W24027

18. Hiau, L. K., & Tang, H. (2016). Domestic Value Added in Exports: Theory and Firm Evidence from China. American Economic Review, 106(6). http://dx.doi.org/1402–1436.10.1257/aer.20131687

19. Kee, H.L., & Tang, H. (2016). Domestic Value Added in Exports: Theory and Firm Evidence from China. Institutions & Transition Economics: Microeconomic Issues eJournal, 106(5), 1402-1436. https://doi.org/10.1257/AER.20131687

20. Kowalski, P., Lopez-Gonzalez, G., & Ugarte, C. (2015). Participation of Developing Countries in Global Value Chains: Implications for Trade and Trade-Related Policies. OECD Trade Policy Papers, 179, OECD Publishing, Paris. http://dx.doi.org/10.1787/5js33lfw0xxn-en

21. Kurmanov, N., Zhagalbayev, B., Feng, W., Seitzhanov, S., Rakhimbekova, A., & Aliyev, U. (2022). Medium and High-Tech Enterprises of Kazakhstan: Factors of Organization and Development of Innovation. Montenegrin Journal of Economics, 18(3), 7-22. https://doi.org/10.14254/1800-5845/2022.18-3.1

22. Lee, J., & Gereffi, G. (2015). Global value chains, rising power firms and economic and social upgrading. Critical Perspectives on International Business, 11(3/4), 319-339. https://doi.org/10.1108/cpoib-03-2014-0018

23. Pinheiro, F.L., Hartmann, D., Boschma, R., & Hidalgo, C.A. (2022). The time and frequency of unrelated diversification. Research Policy, 51(8), 104323. https://doi.org/0.1016/j.respol.2021.104323

24. Sachs, J., & Warner, A. (2001). The Curse of Natural Resources. European Economic Review, 45(4-6), 827-838. https://doi.org/10.1016/S0014-2921(01)00125-8

25. Shevyakova, A., Munsh, E., & Arystan, M. (2019). Towards diversification of the economy of Kazakhstan via information support for the tourism industry. Insights into Regional Development, 1(2), 129-137. http://doi.org/10.9770/IRD.2019.1.2(5)

26. Movkebayeva, G., Aktymbayeva, A., & Smagulova, Sh.A., (2020). Energy security and sustainability in Eurasian economic union in the terms of economic growth: the case of Kazakhstan’s energy sector up to 2040 perspectives. International Journal of Energy Economics and Policy, 10(2), 497–503. https://doi.org/10.32479/ijeep.9073

27. Nguyen, T., & Park, D. (2021). Does Global Value Chain Participation Enhance Export Diversification? Korea and the World Economy, 22(3), 159-191. https://doi.org/10.46665/kwe.2021.12.22.3.159

28. Sarin, V., Mahapatra, S.K., & Sood, N. (2020). Export diversification ans economic growth: a review and future research agenda. Journal of Public Affairs, 54, e2524. https://doi.org/10.1002/pa.2524

29. Smagulova, Sh. A. (2021). Диверсификация экономики Казахстана как приоритет индустриального развития в постпандемийных условиях [Diversification of Kazakhstan’s economy as a priority for industrial development in post-pandemic conditions]. Vestnik universiteta «Turan», 4, 120-126. https://doi.org/10.46914/1562-2959-2021-1-4-120-126 (in Russ.)

30. Taglioni, D., & Winkler, D. (2016). Making Global Value Chains Work for Development: Trade and Development. Washington, DC: World Bank.

31. Halyk Finance (2024). Индустриализация и диверсификация Казахстана: почему мы топчемся на месте уже много лет [Industrialization and diversification of Kazakhstan: Why we have been marking time for many years?] January 19, 2025 from https://halykfinance.kz/download/files/analytics/ac_industrialization.pdf (in Russ.)

32. Timbe, G., Pinheiro, F.L., Bam, W., Hartmann, D., & De Bruyne, K. (2024). Is natural resource abundance a curse or an opportunity? Economic complexity, FDI, and industrial policies in Mozambique. Resources Policy, 98(1), 105326. http://dx.doi.org/10.2139/ssrn.4793284

33. Turkyilmaz, A., Dikhanbayeva, D., Suleiman, Zh., Shaikholla, S., & Shehab, E. (2021). Industry 4.0: Challenges and opportunities for Kazakstan SMEs. Procedia CIRP, 96, 213-218. https://doi.org/10.1016/j.procir.2021.01.077

34. Wallerstein, I. (1974). Comparative Studies in Society and History. Cambridge University Press, 16(4), 387-415.

35. Xue, H. & Chan, A. (2013). The global value chain: Value for Whom? The Soccer Ball Industry in China and Pakistan. Critical Asian Studies, 45(1), 55-77. http://dx.doi.org/10.1080/14672715.2013.758821

36. Yeo, H., & Mah, J. (2024). Industrial policy and diversification in the economic development of Kazakhstan. Asian Journal of Social Sciences and Management Studies, 11(2), 32-40. https://doi.org/10.20448/ajssms.v11i2.5704

37. Zarach, Z.H., & Parteka, A. (2023). Export diversification and dependence on natural resources. Economic Modelling, 126, 106436. http://dx.doi.org/10.1016/j.econmod.2023.106436