KAZAKHSTAN: CAPITAL FORMATION PROBLEMS ON THE WAY TO A MARKET ECONOMY

Abstract

Countries that have taken the road of transition from a planned economy to a market economy encounter roughly similar problems, which have by now been thoroughly studied. Initially, politicians and researchers were concerned about such problems as social stability during the transition crisis, budget execution, the pace of liberalization and advance toward an open economy and, naturally, the character of emerging property relations. One can hardly dispute that at this stage it is extremely difficult to take a systems approach to the creation of market institutions. Naturally, we understand these institutions in the modern sense of the word, as a combination of formal legal frame-work and effective norms, including rules of conduct of market agents actually observed in practice. In the early 1990s, it was assumed (in most cases tacitly) that the formation of a private (preferably competitive) economy would result in a rapid revival of economic activity. In the countries of Central and Eastern Europe, the turn toward the marketplace took about five years, and growth was first recorded in the mid-1990s. The recession in the former socialist countries has been analyzed time and again, but some of the earliest studies already gave a sufficiently clear explanation of the general causes of the transition crisis. As regards Russia and Kazakhstan, these causes were justly listed as follows: manufacture of unneeded goods, inefficient production and irrational allocation of re-source inputs.1