Regional convergence in Kazakhstan

Abstract

This article studies sigma- and beta-convergence across the regions of Kazakhstan over the period of 1993–2014. The results of the article show that incomes across the regions of Kazakhstan diverged over the whole period of 1993–2014 and the period of 1993–2006, and converged during the period of 2006–2014. However, after controlling for the rate of investment and population growth it is evident that regional convergence occurred over the whole period of 1993–2014. This would suggest that since private investment in Kazakhstan is heavily influenced by the availability of natural resources in the regions, regional policy in Kazakhstan should be directed towards shifting away from a resource-based growth model to an alternative growth model.

Keywords:

• Convergence
• region
• economic growth
• sigma-convergence
• beta-convergence

Acknowledgements

This article is a revised and updated version of the article presented at the 18th International Conference on Macroeconomic Analysis and International Finance, University of Crete, Rethymno, Crete, Greece, 29–31 May 2014.

Notes

1. In many cases, the convergence of the types described above, take place not across a whole sample of countries or regions but across sub-groups of the sample. This leads to the notion of club-convergence, which cannot be considered a type of convergence similar to the above-mentioned notions of beta- and sigma-convergence because it only reflects the sample within which convergence is studied.

2. The use of logarithms of income or output per worker instead of functions per se is usual practice in convergence research because, on the one hand, it linearises the production function and, on the other hand, it does not distort results when the growth rate–initial level dependence is examined.