Abstract
The Republic of Kazakhstan’s agricultural development strategy relies on capital subsidies as a main engine for boosting competitiveness. This approach under-estimates the knowledge and incentive problems inherent in state-guided management of sector development. Based on unique farm-level data, we examine the financial constraints actually perceived by farmers. Most farm managers doubt that the returns on agricultural investments are reliable enough for credit funding, so they do not take out loans. We conclude that, rather than pouring money into the sector, the government should improve the local institutional environment and invest in public services relevant to agriculture.
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Notes
- 1.
The ‘Kazakhstan 2050’ strategy (President of the Republic of Kazakhstan 2012) is explained on the website www.strategy2050.kz, where also the ‘Agribusiness 2020’ document (Government of the Republic of Kazakhstan 2012) is available for download. We quote from the officially provided English translation of ‘Kazakhstan 2050’ below. Translations from the original Russian-language version of ‘Agribusiness 2020’ are our own.
- 2.
A public debate in the Kazakh business media revolved around the question of whether or not the country needs a ‘second wave of privatisation’ to overcome the legacies of ‘state-oligarchic capitalism’ and to encourage individual entrepreneurship. Domestic observers complained that no progress was made on this front. Moreover, the state enterprises seriously envisaged for privatisation were public services, such as hospitals or waste management, and not from strategic sectors of the economy (Kasenova 2013; Temirkhanov 2013).
- 3.
A number of grain enterprises in the north of the country were successful in attracting outside equity through agro-holdings (Petrick et al. 2013). We have not analysed this source of funding in depth, but there is casual evidence that it has resulted in widespread modernisation of equipment among the holding branches.
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Petrick, M., Oshakbaev, D., Wandel, J. (2017). More Than Pouring Money Into an Ailing Sector? Farm-level Financial Constraints and Kazakhstan’s ‘Agribusiness 2020’ Strategy. In: Gomez y Paloma, S., Mary, S., Langrell, S., Ciaian, P. (eds) The Eurasian Wheat Belt and Food Security. Springer, Cham. https://doi.org/10.1007/978-3-319-33239-0_7
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