Higher Education in Kazakhstan 2017

OECD

• Publisher: OECD
• Year: 2017
• eBook ISBN: 9789264268944
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Chapter 1. Higher education in Kazakhstan1

Prior to 2014, Kazakhstan’s story had been one of dramatic economic expansion. However the benefits of growth have not been shared equally and there are significant wealth disparities, especially between urban and rural areas. Kazakhstan performs better on the dimensions of well-being that are more closely associated with income. Recent market volatility has emphasised the risks of resource dependence, highlighting the need for economic diversification. Development of the higher education sector is crucial for Kazakhstan to address its diversification challenge. Its highly centralised top-down system of governance is reflected in the education system. A new State Programme for Education and Science Development 2016-2019 (SPESD) for 2016-19 lays out the current strategy for the education sector. While basic education is quasi-universal and the level of educational attainment is comparable to OECD levels, the average quality of schooling is low, and funding remains below international standards. Despite the significant reforms that Kazakhstan has undertaken, there remains substantial room to improve its effectiveness and thereby enhance learning outcomes.

Economic and political context

The Republic of Kazakhstan is a landlocked middle-income country spanning Europe and Asia. It is the ninth-largest country in the world by land surface, but its population density is low given that it has only 17.5 million inhabitants (estimation of the population in 2016). The Republic is bordered by the Russian Federation to the north, the Caspian Sea to the west, People’s Republic of China to the south-east, the Kyrgyz Republic and Uzbekistan to the south, and Turkmenistan to the south-west.

Kazakhstan achieved independence in 1991. With its long history of centralised planning, the country’s transition to a more market-oriented economy was unstable and disruptive. During the 1990s, it experienced hyperinflation, the loss of more than 1.5 million jobs and a dramatic decline in real gross domestic product (GDP) (OECD, 2016a). This was accompanied by significant emigration.

Recent economic performance

For most of this century, Kazakhstan’s story has been one of dramatic economic expansion. As demonstrated in Figure 1.1, GDP growth from 2000 to 2014 averaged an impressive 8% per year. Between 2001 and 2013, Kazakhstan more than doubled its GDP per capita to around USD 13 000 at current market exchange rates. This growth can largely be attributed to rising prices for Kazakhstan’s leading exports – mainly oil, metals, and grain. In 2013, the largest sectors of Kazakhstan’s economy (in terms of share of GDP) were wholesale and retail trade, natural resource extraction, real estate, transportation and storage, construction and agriculture. Together these six sectors made up more than 50% of Kazakhstan’s GDP (OECD, 2016a).

Figure 1.1. Kazakhstan and comparator countries’ real annual GDP growth (2000-2014)

Sources: World Bank (2014), World Development Indicators (database), http://data.worldbank.org.

The benefits of growth have not been shared equally and there are significant wealth disparities among Kazakhstan’s regions. In 2014, the national GDP per capita at USD 13 154 was three times higher in the western, oil-rich region of Atyrau (USD 39 072) and more than twice lower than the national average in Almaty city (USD 29 286). However, South Kazakhstan’s GDP per capita (USD 4 775) was just one-third of the national average (OECD, 2016a).

Dependence on natural resources

The importance of extractive industries in Kazakhstan’s economy cannot be overstated. Due to increases in both production and prices, the oil and gas sector and related activities came to make up 25% of GDP during the early 2000s and almost 35% during 2005-08. In recent years the sector’s share of GDP has fallen, but it still accounts for roughly two-thirds of exports and approximately one-third of budget revenues (OECD, 2016a).

Kazakhstan’s government has used resource-related public revenues to establish a sovereign wealth fund, Samruk-Kazyna, whose goals are to enhance economic competitiveness and sustainability, and to mitigate the impact of external shocks on domestic development. Yet even with the fund in place, Kazakhstan’s economy has felt the effects of external shocks – and in particular, of the recent dramatic decline in the price of oil (from USD 110 per barrel in June 2014 to under USD 50 in June 2016) (OECD, 2016a). GDP growth slowed from 5.9% in 2013 to 4.3% in 2014 and to 1.2% in 2015. The economy is expected to contract in 2016 (Figure 1.2). This would be the first annual fall in real GDP since the Russian financial crisis of 1998 (Intelligence Economist Unit, 2016). An economic slowdown in the People's Republic of China and the Russian Federation, two of Kazakhstan’s primary trade partners, has highlighted the structural weaknesses in Kazakhstan’s economy. Reflecting this economic turmoil, the value of the country’s currency, the tenge, has fallen sharply.

Figure 1.2. Kazakhstan’s real GDP growth (2013-2016)

Notes: Rates from 2013 to 2015 are the actual rates (a); rates for 2016 are The Economist Intelligence Unit’s forecasts (b).

Sources: International Monetary Fund (2016), International Financial Statistics; Intelligence Economist Unit, http://data.imf.org/?sk=388DFA60-1D26-4ADE-B505-A05A558D9A42.

Kazakhstan’s reliance on natural resources has taken a toll on the environment. With water shortages and considerable pollution, Kazakhstan’s fragile ecology is vulnerable to the effects of climate change. Over 75% of the country’s land is used for agriculture, making reliable access to water an ongoing concern – especially in regions like Central Kazakhstan. In recognition of its economy’s reliance on natural resources, and of the impact this reliance has on the environment, Kazakhstan has recently been investing in sustainable, renewable energy sources and in better management of its water, land, air and other natural resources (OECD, 2016a).

Other sectors

Kazakhstan has long recognised that its significant dependency on oil and other extractive industries means that it needs to diversify its economy. In recent years, growth in manufacturing and knowledge-intensive services has helped with diversification. However, manufacturing in Kazakhstan is not as developed as in many other emerging economies or in many advanced resource-rich countries: manufacturing accounts for just 11% of GDP and employs 5% of the labour force. The fastest-growing manufacturing sectors include transportation equipment, chemicals and pharmaceuticals, rubber, refined petroleum and food processing. Employment in knowledge-intensive services –including information and communications technology (ICT), finance and professional services – has also increased in recent years (OECD, 2016a).

In Kazakhstan, public and state-owned entities still account for approximately one-third of GDP. Since independence, privatisation efforts have led to a larger private sector, but this contains many big conglomerates stretching across multiple areas of activity. As a result, there is a powerful business class with enough political influence to oppose market reforms that threaten its interests (OECD, 2016a).

Kazakhstan’s weak financial sector is a significant constraint on private business development. Bank lending is an important source of financing for firms, but lending growth has been modest. Compared to similarly situated countries, Kazakhstan ranks low on key financial indicators such as the size of the stock market and local capital markets.

Small-and medium-sized enterprises (SMEs) account for roughly 20% of GDP, a comparatively low share by international standards. They nonetheless play an increasing role in job creation, accounting for 30% of total employment as compared to 26% a decade ago (OECD, 2016a). Business climate constraints and limited access to finance raise challenges for the further development of Kazakhstan’s SMEs. However, a number of programmes have recently been implemented to increase SMEs access to finance.

Kazakhstan has taken many steps to improve its business climate and lower regulatory burdens. On the “ease of doing business” measures, Kazakhstan ranks 77th out of 189 countries but has lost 27 places since 2014 (World Bank, 2016). There remains ample room to encourage entrepreneurialism and private sector growth.

The labour market

Kazakhstan’s labour force utilisation has increased considerably over the course of this century, and is in line with...

Table of contents

• Title page
• Legal and rights
• Foreword
• Acknowledgements
• Acronyms and abbreviations
• Executive summary
• Assessment and recommendations
• Chapter 1. Higher education in Kazakhstan
• Chapter 2. Quality and relevance of higher education in Kazakhstan
• Chapter 3. Access and equity in higher education in Kazakhstan
• Chapter 4. Internationalisation and higher education in Kazakhstan
• Chapter 5. Integration of education, research and innovation in Kazakhstan
• Chapter 6. Financing higher education in Kazakhstan
• Chapter 7. The governance of higher education in Kazakhstan
• Chapter 8. Concluding remarks
• About the OECD