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A new study identifies challenges and opportunities to help Kazakhstan and its regions to diversify its economy and boost its export capabilities.

The study, “Diversification of Kazakhstan’s economy: a capability-based approach”, was produced by the strategy and public policy advisory firm Whiteshield Partners and funded jointly by the government of Kazakhstan and the EBRD’s Shareholders’ Special Fund.

Launched in Astana on 17 September, the study examines factors that support the development of knowledge-based export capabilities in each of Kazakhstan’s 16 regions. Analysing over 10 years of detailed regional export data for each sector, the report compares the development trajectories of the regions and identifies region-specific policy priorities.

Contrasting the experiences of three pairs of regions, the report identifies specific product areas that each region could potentially develop based on current knowledge and economic capabilities, from hydrometers and pyrometers for Atyrau to electrical light equipment in Pavlodar.

The report recommends that each region’s diversification strategy needs to take local circumstances into account. Regions that have already succeeded in developing new capabilities over the past ten years, such as Almaty, now need to focus more on innovation and moving up the value chain in sectors where they have comparative advantages. Regions with less developed capabilities need to broaden the skills and capabilities first, which can be achieved through policies focused on training, improvements in the business environment and better cooperation between regions.

The report also includes conclusions from a round table hosted by the Ministry of National Economy in July 2015 and chaired by Kairbek Uskenbayev, Vice-Minister of National Economy. Representatives of the six regions covered by the report participated in the discussion.

Alexander Plekhanov, lead economist at the EBRD, said: “Diversification of the economy away from excessive dependence on oil and gas is of utmost importance for Kazakhstan. To achieve diversification, regions need to work together, building on each other’s comparative advantages and economic capabilities.”

Kairbek Uskenbayev agreed: “Regional diversification is one of the main elements for successful development of the whole country.”

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