Political Economy of Kazakhstan When Essay

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At the same time, foreign direct investment capital increased exponentially in different areas. These factors allowed the banking sector become well capitalized with over $1 billion in reserves. (Lewis) (Dosmukhamedov)

According to Baumol (2007) the basic models that were used to help create these transformations were a combination of big firm and enterprise centric capitalism. This is when private businesses were allowed to develop, produce and deliver various products to the market place with little to no outside government interference. This resulted in a series of economic partnerships with countries such as Russia and China for the development of oil / gas natural pipelines. The impact this is having on the economy, is to transform the nation and the industries which are operating throughout the region. These changes have created tremendous amounts of economic growth with this accounting for GDP increases of 10.3% to 4.5% between 2010 and 2012. However, the dependence on oil and gas exports has caused these numbers become volatile when there is a sudden collapse in prices (such as: in 2009 with GDP rates declining to -4.5% in the first quarter). (Baumol)

Regionalization to the Soviet Union

Politically, Kazakhstan has been facing challenges associated with its close cultural ties to Russia. This means that despite the tremendous amounts of economic growth. There have been times when the government has conducted purges to rid itself of any kind of opposition. This has resulted in many political opponents being sacked or individuals who question the authority of the state facing jail terms (based upon: fictitious charges against them). At the same time, the executive branch has been exerting tremendous amounts of influence over the legislature. This is following a similar pattern, with what has been occurring in Russia and many of the former states of the Soviet Union. (Dosmukhamedov) (Baumol) (Lewis)

According to Baumol (2007), this is one of the dangers facing the country as it tries to grow economically. Yet, politically, the country is engaging in many questionable practices to quell descent and consolidate power among select individuals. This is highlighting that the attempt to create perpetual growth may result in some kind of slowdown economically. The way that this will occur is foreign direct investment capital could begin to decline. This is because of concerns that Kazakhstan is not embracing true political reforms to accompany economic progress. This will hurt the nation's ability to work with the West and seek the support its needs from these nations. (Baumol)

General Conditions

The general conditions are that the country has been experiencing tremendous amounts of economic growth. However, this has been taking place based upon the production of oil and gas to countries such as China. The problem is that this model may not be economically viable given the current economic backdrop and political situation. This will make it harder for the country to continue to receive international recognition for their progress because of these conflicting problems hurting its image. It is at this point when foreign direct investors may become hesitant about supporting certain sectors, the government is utilizing to diversify the economy (such as: banking). (Dosmukhamedov)

For instance, since 2010, these criticisms have been mounting based upon the lack of democratic reforms and the consolidation of power under one particular group. This occurred with President Nazarbayev being granted the title of Leader of the Nation and the Parliament allowing him to remain in power until 2020. The courts have declared these actions unconstitutional. Yet, this has not deterred or changed the political situation. (Dosmukhamedov)

Instead, his party has become more dominant in imposing its will. Last year, during a regional election for Parliament, a number of observers claimed that it was rigged with outside parties receiving 7% of the vote. This is indicating that the economic progress has occurred in an oppressive environment. Over the long-term, these challenges could lead directly to problems associated with the inability to create open reforms. This will not provide foreign direct investors with confidence, in the government's ability to enact responsible policies. (Dosmukhamedov)

Works Cited

Baumol, William. Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity. New Haven: Yale University Press, 2007. Print.

Dosmukhamedov, Yerzhan. Kazakhstan's Assassinated Democracy. New York: Simon and Schuster, 2012. Print

Lewis, David. "Resources and Rivalries…

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