Much has been written about Kazakhstan’s recent transformation and emergence as a significant regional hub for economic investment, technological development, educational improvements, and infrastructural modernization. In what can be characterized as an ongoing project in national branding, the largest, and arguably most important, country in Central Asia has shown that a thirty-year transition from a former Soviet republic to a sovereign and independent state requires an economic transformation alongside socio-political changes. In this context, Kazakhstan, long known for its rich natural resources, is shifting from an extractive economy to a sustainable one, with the goal of further transforming into an innovation-driven economy for other countries of the Global South.
This developmental path follows a logical progression. As a newly independent state in the 1990s, Kazakhstan’s political leadership recognized that a country rich in oil, gas, and minerals could maintain relations with Russia and other former Soviet republics while also attracting new investment from markets in Europe, the Middle East, and East Asia. However, while an extractive economy provides initial success, it also brings new challenges such as environmental pollution and degradation, water scarcity, and dependency on specific heavy industrial sectors.
Thus, the country’s emphasis on “sustainability” reflects, first, the recognition by political and economic leaders of the need to evolve beyond an extractive economy toward a focus on social responsibility, environmental awareness, and employee well-being; and second, the critical importance of a diversified national economy that can engage with other states on an equal footing.
At the forefront of Kazakhstan’s transformation are its growing independent businesses that are participating in global markets and representing the so-called New Kazakhstan, which is becoming a noticeable player in the global economy.
According to Yerkin Tatishev, a prominent Kazakh entrepreneur and founder of the diversified holding company Kusto Group, Kazakhstan’s business environment has significantly transformed over the years. “Around twenty years ago, when Kusto Group was founded, competition in Kazakhstan was scarce and largely focused on the energy and mining sectors. Technological development was historically slow, and young people were increasingly looking to leave the country for better opportunities and education. However, with the introduction of recent economic and political reforms, the country’s business environment today is increasingly resembling regions with historically developed and functioning free-market economies. Despite these clear achievements, Kazakhstan still needs to provide more freedom to businesses and improve the government regulatory environment in order to unleash its full potential,” says Tatishev.
The long road from an extractive to a modern manufacturing and eventually to an innovative economy is catapulting Kazakhstan from the periphery to a regional influencer. This transition is evident in various sectors, including agriculture, finance, and renewable energy. Kazakhstan’s strategic initiatives, such as the adoption of green energy policies, commitment to carbon neutrality by 2060, and investments in high-tech industries, are paving the way for a more resilient and diversified economy.
In the agricultural sector, for example, Kazakhstan is moving beyond traditional farming practices to embrace precision agriculture and sustainable farming techniques. These advancements are not only increasing crop yields but also minimizing environmental impact. The government’s support for agritech startups and the introduction of modern irrigation systems, largely developed in cooperation with European partners, are helping to combat the challenges of water scarcity and soil degradation—issues that have long persisted in the region.
The financial sector is also experiencing rapid growth. The establishment of the Astana International Financial Centre (AIFC) has attracted global investors and positioned Kazakhstan as a financial hub in Central Asia. The AIFC, with its favorable regulatory environment, is fostering innovation in fintech, Islamic finance, and green finance, contributing to the broader goal of economic diversification. This allowed for the creation of successful startups originating from Kazakhstan, such as the now London-listed Kaspi Bank, which is dominating the regional user-friendly e-banking industry.
However, no success comes without challenges. The pressures of expanding market sectors must be balanced against growing environmental concerns. Kazakhstan faces limited access to clean water, constraining the growth of its agricultural sector, while there have been instances of environmental hazards at some of its key industries. All too often, industrialization and modernization occur at the expense of the environment and public health. With the recent introduction of fines targeting major polluters, the government hopes to crack down on industries that have refused to adapt to newly introduced environmental laws.
To change attitudes toward the environment and sustainable development in the long-run, Tatishev believes that education should be a key pillar: “Investments in education are crucial for Kazakhstan if it wants to secure the next generation of business leaders and innovators who will base their business practices on sustainable principles. Kusto Group has been a continuous supporter of innovation and reform in education, including through the foundation of the High-Tech Academy in Almaty, a state-of-the-art modern school that is educating the future generation of leaders in technology, management, and business through a focus on tackling real world problems through team building.”
Tatishev, who is also the Chairman of the Board of Trustees of the Almaty Management University, one of the first management universities in the region, believes that “sustainability” requires models and strategies of innovation, including: “New ways of thinking and planning; educational opportunities for skilled workers; holistic approaches to businesses that promote the empowerment and well-being of employees; and changing not only how people work but how people think and envision the future”.
Cooperation between policymakers, educational institutions, and business leaders is essential to making “sustainable” economies a reality. Creative approaches to transforming agricultural and industrial sectors toward eco-friendly methods will also help elevate states and societies to become more strategically innovative. However, this is no easy task, as it demands a fundamental shift in priorities, significant investments, and alignment among various stakeholders, including the government, policy and education space.
Overcoming entrenched practices, aligning regulatory frameworks with innovation, and addressing the financial and technical challenges that industries face during the transition to sustainable practices are critical steps in this journey. Since gaining independence in 1991, Kazakhstan has made remarkable strides in shifting its economy from a reliance on primary, extractive industries to a focus on tertiary, innovation-driven sectors. Yet, the key question remains – can the nation’s reforms keep pace with the evolving demands of its dynamic, youthful, and tech-driven business landscape?
