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Kazakhstan - A Model of Equality

Updated: Mar 5, 2019

Kazakhstan is a very large but sparsely populated country nestled in central Asia between Russia and its smaller former Soviet Union neighbors. It is landlocked with an economy based on exporting natural resources. Almost 40% of Kazakhstan's exports are crude oil.

With a population of 18 million Kazakhstan is able to maintain its rank among the most egalitarian countries in the world, with a GINI coefficient score of 26.90 (WB, 2016) - that's lower than any of the Scandinavian countries. In fact, it is only beaten by five other countries using this measure (four of which are former Soviet Union states).

First, we should discuss the merits of the GINI coefficient. It is scaled to measure inequality used by both the Central Intelligence Agency (CIA) and the World Bank. It gives countries a score from 0 to 100 (%), 0 being total equality and 100 being complete inequality. This is measured by Income distribution and Gross Domestic Product (GDP). This creates a comprehensive picture of how inequality has been changing over the years.

The graphs below show the GINI score and change of GINI for countries. Kazahkstan is the highlighted blue point in the first graph. Countries below the red line show a decrease in their GINI over the years.

There are a few issues with the GINI coefficient as a measurement of inequality however. Even though the GINI is able to record total inequality quite well, it does not show where this inequality exists. More importantly, it emphasizes inequality in the middle class and therefore undermines inequality between the lower 40 and upper 10%. This gives lower and middle-income countries an edge where this sort of inequality is more rampant. Furthermore, the way income distribution is reported, via spending or income surveys often undervalues the income from higher income groups since they spend less of their total income and are more likely to participate in tax evasion. That can further hide inequalities within countries.

OK, tangent over, but here is a study looking at how income inequality is measured for those interesting in finding out more.

Let's dive into some of the ways in which Kazakhstan was able to become and is maintaining its relative equality. For this we will want to look at another measure of inequality: income distribution across the population divided by income group. This is scored similarly to the GINI by looking at direct income and consumption of people within a group and then extrapolating these findings across the entire group. Below is a chart for the income groups separated into quintiles of the population for Kazakhstan from 2001 to 2015.

The trends represented in these graphs show how income distribution has shifted from the highest earning 20% and from the higher-middle income group to the lowest, lower-middle and middle-income groups. This provides evidence for a growing middle class. However, is it also evident that the wealthiest 20% have a substantial share of the income (36.9% to be exact) and there is relatively little difference between the other four income groups (only 12.2% between the lowest and 4th 20%). Explanations for this distribution of wealth are complex and therefore I will not enter into specifics here. I encourage you to do some of your own research for how inequalities arise in countries.

In 2007, Kazakhstan started a stimulus package aimed at stabilizing consumption by giving benefits to families and other sectors. Started in response to the 2008 global financial crisis, families with children receive an allowance if their income is lower than the price of general food baskets, whilst there were also measures for raising the wages of public sector employees and pension benefits. By 2009, the stimulus package was worth approximately 16 billion USD or 15% of GDP.

For more information on poverty reduction, you might want to check out this paper.

This does not mean that Kazakhstan is on its way the becoming an economic powerhouse or social haven, but their progress is remarkable. GDP has grown six-fold since 2002, and they transitioned to the upper-middle income group in 2006 (World Bank). They still face many challenges that are created by being very sparsely populated and landlocked, but they are making an effort to diversify their economy in an ambitious plan to further their prosperity by 2050.

These goals seem to be catering specifically towards the Millennium Development Goals and the OECD's recommendation on economic growth. This, of course, isn't a bad thing but might shine some light on an alternative motive of catering to the west.

This leads me to my final point about gender equality in Kazakhstan. In a statement to the UN Women, the delegation from the Republic of Kazakhstan said: "Kazakhstan has adopted legal norms which provide actual equality for all citizens, regardless of their sex, gender, race, ethnicity, or religious affiliation." Gender equality has been on its way up, but there is still a long way to go. Especially when it comes to women in leadership positions. Only 11.6% of CEOs are women, there are just 4 out of 47 female senators in the Senate, and only 29 female members of parliament out of a total of 107. Domestic abuse is also a problem, as even with new laws passed by Nazarbayev (the president of Kazakhstan), it is not possible for law enforcement agencies to protect women under threat of domestic violence.

Some of these problems stem from Kazakhstan’s conservative and patriarchal history rooted within the traditions of Islam. There has been a resurgence of more radical forms of Islam after religious expression was mostly stifled under Soviet influence. The Kazakh government is working with religious leaders to promote a "liberal, tolerant form of Islam, taking into consideration elements of local traditions and history" (Aidos Sarym, an Almaty based expert on the topic).

Ultimately, this topic is extensive and complicated and there is much more to unpack here. However, I believe that Kazakhstan is an example of how inequality can be reduced in middle-income countries through government implementation of wealth redistribution and good governance during times of economic growth.

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