As Kazakhstan strives to be one of the most 30 developed nations by 2050, Kazakhstan struggles with transforming its economic system, dealing with regional issues including economic integration and terrorism, and with transforming Kazakhstan’s Soviet-era villages into modern day cities which will assist in Kazakhstan’s long-term development.
One of the main nine concepts of the Kazakhstan Strategy 2050 is industrialization which is required to exploit Kazakhstan’s natural gas and oil reserves. Industrialization and the implementation of Special Economic Zones (SEZs) will attract foreign investors boosting its economy and maintaining Kazakhstan’s relationships with companies and foreign nations.
Kazakhstan, within the history and context of the Soviet Union, was a dumping ground for the Soviet Union’s unwanted persons and used as a nuclear testing ground (specifically Semipalatinsk, now called Semey). Populations are scattered throughout Kazakhstan in large cities once populated by ethnic Russians who left once the Soviet Union disintegrated.
In Kazakhstan, a mono-city is defined by more than 20% of the population working in one industry. Mono cities were part of the planned and centralized economy and when Kazakhstan transitioned to a market economy and “many small and medium sized cities gradually started to fall into decline, which was caused mainly by low competitiveness of local enterprises.” Mono-cities still remained. “Mono-cities” were the industrial and economic backbone for municipalities. The mono-city is an urbanization pattern still prevalent in Russia that is vulnerable to economic shocks. If the company or industry falters or demand sharply drops for the product, the city experiences a sharp economic downturn which results in the loss of wages, jobs, and decline in the condition of living increasing social tensions and possibly violence. This was feared in the mono-city of Temirtau in 2015.
As the national population rose, the population(s) of mono-cities declined by 4% during the last ten years (2005-2015) and the elderly populations of mono-cities exceeded 18% which increases the need for pension funds, more healthcare and a declining population. In Kazakhstan, 9%-10% of the population lives in 27 mono-cities in ten different regions; ten mono-cities are in Karaganda Province alone. Citing statistics from UNESCAP , the mono-cities make up 16.8% of the country’s urban population. Most of the mono-cities are have populations below 50,000 with the exception of eight medium-sized cities with populations between 50,000-100,000, and four larger cities with populations over “100,000–Temirtau, Rudny, Zhanaozen, and Ekibastuzand one large city – Termirtau with population above 150,000.”
Workers at Temirtau, the location of Kazakhstan’s largest steelworks plant, were experiencing imminent wage cuts by 25% in July by the company ArcelorMittal Temirtau . This non-consensual wage decrease violated the country’s Labor Code which recognized the order to be ineffective. ArcelorMittal Temirtau was in a similar situation in February 2015 when the company had to pay wages as part of an agreement with Trade Union of Workers of Mining and Metallurgical Industries. The wages in Temirtau are impacted by Kazakhstan’s non-competitiveness in the steel industries and Russia’s 80% de-evaluation of the ruble according to Kazakh news agency , Tengrinews.
The mono-cities have been the subject of economic diversification by the Kazakh government within the framework of State Program of Regional Development 2020. The mono-cities make modicum contributions to economy as the Kazakh economy is focusing more on global services and natural gas. The State Program of Regional Development strives to “ remove social stress in the mono and small cities, to create the new centers of economic growth” Trade blocks are also causing Kazakhstan economic problems. The State Program on the Development of Mono-cities for 2012-2020 is the first urbanization program for mono-cities approved by the government in May 2012. By the end of the 2015, “141.3 billion KZT [(Kazakh tenge)] [will be spent] on this Program.”
The Development of Mono-cities Program has four goals as identified by the Eurasian Research Institute based in Almaty, Kazakhstan: make the size of the mono-city proportionate to the size of the population; diversify the economy with more SMEs; increase labor mobility in mono- cities; and attract infrastructural development. The program is expected to “increase industrial output by mono-cities by 20%” and reduce poverty and the unemployment rate. Increasing labor mobility would be difficult because of the very nature of mono-cities unless there is a transfer mechanism in place. According to the second phase of the project, focused on entrepreneurship and microloans , those who “willing and having the ability to start or expand their own business may participate in the second phase” and will be executed through employment centers in the mono-cities. The Fund for Financial Support of Agriculture will also assist in the development of the mono-cities. The State Program on the Development of Mono-cities plans to provide microloans worth 1.4 billion tenge.
The four mono-cities of Zyryanovsk, Kurchatov (one of the nuclear test sites, Semipalatinsk-21), Ridder (a mining site) and Serebryansk already have comprehensive programs for future development. Infrastructure was supplied to the Central Asia state by the Soviet Union but they are in disrepair. The infrastructure of the mono-cities should be provided by the government. Foreign direct investment would also increase infrastructure projects. An example would be China and its rejuvenation of the “Silk Road.” Transfers from the national budget development of social and engineering infrastructure supplied mono-cities received 5.5 % of 43.0 billion tenge.
With growth, the cities can begin to accommodate more than just one single dominant industry. Services such as technology and manufacturing are increasing and it would be beneficial to the mono-cities and the Kazakh government if these types of services were introduced into a mono-city. Kazakhstan’s Ministry of the Economy stated that in 2013 the budget of the State Program to Develop Mono-cities allocated 38.3 billion tenge “devoted to operating costs, demolition of empty buildings, and also on reconstruction and building of infrastructure objects, [and to] support of small and medium business.” Renovation of the mono-cities would make the mono-cities more modern, but fails to address their non-competitiveness.
The Government is already working with the United Nations Development Program and United Nations Children’s Fund (UNICEF) to assess the status of mono-cities and assist in development. The city of Ust-Kamenogorsk (or Oskemen) in Kazakhstan signed up for the UNICEF Program on making cities child friendly by “ improvement of quality of life of children by a way of providing social and legal guarantees.” Their goal is stop and alleviate the urban poverty that mono-cities create. The government has also begun geographic exploration near the mono-cities directed by the Ministry for Investment and Development in the Zhezkazgan, Satpayev, and Ulytau regions. The people in mono-cities would benefit from labor mobility or job placement programs, or job transfer programs. People outside of the mono-cities would benefit from working in the mono-cities. Exporting experts from the economic hubs in the country would also be helpful. The government, as it increases its focus on the information technology sector, should create a technology park near or in the mono-cities which requires updated infrastructure. Education grants and the ability to participate in state economic programs would also assist families in breaking the cycle of poverty.
Privatization of the mono-cities would help solidify Kazakhstan’s transition to the market economy. Another option would be to eliminate the urbanization pattern of mono-cities which privatization would achieve. This urbanization pattern is incongruent with Kazakhstan’s market economy. Understanding that most of the industries are state-owned in the mono-cities some industries and new economic initiatives in the industrial towns be backed by foreign investors. As Kazakhstan struggles with de-evaluation of their currency, and amid reports of food prices rising , the economic situation in the mono cities could become amplified for the Kazakh government posing new challenges and raising new questions about the vitality of these cities.