![Sample our Area Studies journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5922/TOC-Subject-Sample-2021-Area-Studies.jpg"})
Abstract
Foreign direct investment (FDI) can deliver benefits beyond the provision of capital, such as efficiency gains. We argue that the theorised positive effects of economic linkage are reduced when linkages are based on natural resources. Domestic elite coalitions supporting reform are also weaker in countries with extensive natural resources. Kazakhstan and Azerbaijan have high-value natural resources and significant FDI, making them most likely cases for reform. Kyrgyzstan is a contrasting case as it has few natural resources. We find that the institutional reforms we would anticipate because of linkages have not occurred and those that exist are often cosmetic.
Notes
1 ‘Tax Policy Reforms in the Slovak Republic’, OECD, available at: https://www.oecd.org/tax/tax-policy/37154700.pdf, accessed 24 February 2019.
2 EU–Kazakhstan Relations (Brussels, European Union External Action, 2017), available at: https://eeas.europa.eu/headquarters/headquarters-homepage_en/4076/EU-Kazakhstan%20relations, accessed 24 February 2019.
3 ‘Former OSCE Chairpersons-in-Office’, OSCE, available at: https://www.osce.org/chairmanship/former-chairpersons-in-office, accessed 21 February 2019.
4 Multi-dimensional Review of Kazakhstan: Volume 1. Initial Assessment, OECD Development Pathways (Paris, OECD Publishing, 2016), available at: http://dx.doi.org/10.1787/9789264246768-en, accessed 4 January 2018.
5 Multi-dimensional Review of Kazakhstan: Volume 1. Initial Assessment, OECD Development Pathways (Paris, OECD Publishing, 2016), available at: http://dx.doi.org/10.1787/9789264246768-en, accessed 4 January 2018.
6 ‘Aliyev Targets Azeri Diversification and FDI in Non-oil Industries’, Azernews, 12 January 2016, available at: http://www.eurasianbusinessbriefing.com/aliyev-targets-azeri-diversification-and-fdi-in-non-oil-industries/, accessed 8 January 2018.
7 Azerbaijan: Investment Climate Statement, 2015, US Department of State, available at: https://www.state.gov/documents/organization/241680.pdf, accessed 15 January 2017.
8 ‘Investment Climate Statements for 2016, Kyrgyz Republic’, US Department of State, available at: http://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/index.htm?year=2016&dlid=254483, accessed 12 June 2017.
9 ‘Mining in Kyrgyzstan Gold in the Hills’, The Economist, 16 March 2013.
10 ‘Overview of USAID Projects in the Kyrgyz Republic as of March, 2014’, available at: https://www.usaid.gov/kyrgyz-republic/key-documents, accessed 12 June 2017.
11 European Union–Kyrgyz Republic Cooperation for Development, available at: https://eeas.europa.eu/sites/eeas/files/brochure_2015_en.pdf, accessed 12 June 2017.
12 World Bank Data, 2016, available at: http://data.worldbank.org/country, accessed 15 January 2017.
13 ‘What is China's Belt and Road Initiative?’, The Economist, 15 May 2017, available at: https://www.economist.com/blogs/economist-explains/2017/05/economist-explains-11, accessed 21 January 2018.
14 ‘Kazakhstan and the WTO’, World Trade Organization, 2015, available at: https://www.wto.org/english/thewto_e/countries_e/kazakhstan_e.htm, accessed 24 February 2019.
15 Kazakhstan is ranked 35 in the World Bank report, Doing Business 2017, 50 in the Global Competitiveness Report, and 68 in the Index of Economic Freedom. (Doing Business 2017, World Bank, available at: http://www.doingbusiness.org/reports/global-reports/doing-business-2017, accessed 3 January 2018.)
16 Doing Business 2017, World Bank, available at: http://www.doingbusiness.org/reports/global-reports/doing-business-2017, accessed 3 January 2018.
17 The World Bank's process of assessment involves reviewing the relevant laws and asking lawyers in Almaty to consider how a hypothetical case would proceed. Critics of this approach remarked that it failed to capture the complexity of the situation and is only based on the experience of selected firms (Davis & Kruse Citation2007; Besley Citation2015). There is also concern that there may be significant ‘divergence between the stylised legal practices assumed in the DB [Doing Business] project's scenario and actual legal practice. … We are concerned about the reliability of responses to questions about relatively uncommon hypothetical scenarios’ (Davis & Kruse Citation2007, p. 1107).
18 Law No. 266-XIII of 27th December 1994 of the Republic of Kazakhstan Concerning Foreign Investments, available at: https://online.zakon.kz/document/?doc_id=1030647#pos=0;224, accessed 21 February 2019.
19 KAZ-1997-L-51292 Law on State Support for Direct Investments, 1997 Adoption: 1997-02-28.
20 OECD Investment Guides: Kazakhstan 1998, available at: http://www.oecd-ilibrary.org/finance-and-investment/investment-guides-kazakhstan-1998_9789264163546-en, accessed 10 December 2015.
21 ‘2015 Investment Climate Statement—Kazakhstan’, US Department of State, 2015, available at: http://www.state.gov/e/eb/rls/othr/ics/2015/241613.htm, accessed 16 May 2016.
22 OECD Investment Policy Review: Kazakhstan. 2012, available at: http://www.oecd-ilibrary.org/finance-and-investment/oecd-investment-policy-reviews-kazakhstan-2012_9789264121812-en, accessed 8 January 2018.
23 The following laws were replaced by the Entrepreneurial Code of Kazakhstan: Law No. 214 ‘On Homestead or Commercial Farming’, 31 March 1998; Law No. 373 ‘On Investments’, 8 January 2003; Law No. 124 ‘On Private Entrepreneurship’, 31 January 2006; Law No. 112-IV ‘On Competition’, 25 December 2008; Law No. 377-IV ‘On State Control and Monitoring in the Republic of Kazakhstan’, 6 January 2011; Law No. 534-IV ‘On State Support for Industrial and Innovation Activities’, 9 January 2012 (Tanasheva et al. Citation2016).
24 Doing Business Guide Kazakhstan 2017, PricewaterhouseCoopers Tax and Advisory LLP, 2017, available at: https://www.pwc.de/de/internationale-maerkte/doing-business-in-kazakhstan-2017.pdf, accessed 25 February 2019.
25 ‘2015 Investment Climate Statement—Kazakhstan’, US Department of State, 2015, available at: http://www.state.gov/e/eb/rls/othr/ics/2015/241613.htm, accessed 16 May 2016.
26 Kazakhstan: V poiskakh novoi modeli rosta: srochnaya neobkhdimost’ ekonomicheskoi transofmatsii—Doklad ob ekonomike, Report prepared by the World Bank, Spring 2018, available at: http://documents.vsemirnyjbank.org/curated/ru/443681527664626790/pdf/126685-WP-PUBLIC-RUSSIAN-KAZ-CEU-Spring-2018-final-final-rus-corrected-002.pdf, accessed 26 February 2019.
27 ‘UNCITRAL Arbitration Rules’, adopted in 1976 and revised in 2010 and 2013, available at: https://uncitral.un.org/en/texts/arbitration/contractualtexts/arbitration, accessed 26 February 2019.
28 ‘Commercial Laws of Kazakhstan, an Assessment by EBRD’, 2014, available at: https://webcache.googleusercontent.com/search?q=cache:AstNcMUwb6sJ:https://www.ebrd.com/documents/legal-reform/kazakhstan-country-law-assessment.pdf+&cd=2&hl=en&ct=clnk&gl=us, accessed 26 February 2019.
29 Multi-dimensional Review of Kazakhstan: Volume 1. Initial Assessment, OECD Development Pathways (Paris, OECD Publishing, 2016), available at: http://dx.doi.org/10.1787/9789264246768-en, accessed 4 January 2018.
30 ‘Kazakhstan as Respondent State’, United Nations Conference on Trade and Development, 2018, available at: https://investmentpolicyhub.unctad.org/ISDS/CountryCases/107?partyRole=2, accessed 26 February 2019.
31 ‘Tristan Oil Announces $506 Million Arbitration Award Against Republic of Kazakhstan’, Reuters, 8 January 2014.
32 ‘National Trade Estimate Report on Foreign Trade Barriers, Kazakhstan’, 2014, Office of the United States Trade Representative, available at: https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2014-NTE-Report, accessed 4 January 2018.
33 ‘Over 30 Cos. May Lose Mineral Development Licenses, Including Kazatomprom’, Central Asia & Caucasus Business Weekly, 24 April 2012.
34 OECD Investment Policy Review: Kazakhstan. 2012, available at: http://www.oecd-ilibrary.org/finance-and-investment/oecd-investment-policy-reviews-kazakhstan-2012_9789264121812-en, accessed 8 January 2018; ‘2015 Investment Climate Statement—Kazakhstan’, US Department of State, 2015, available at: http://www.state.gov/e/eb/rls/othr/ics/2015/241613.htm, accessed 16 May 2016.
35 ‘Doing Business in Kazakhstan: 2012 Commercial Guide for US Companies’, 2012, US Commercial Service, Department of Commerce.
36 ‘Law of the Azerbaijan Republic on Investment Activity’, Law № 952, available at: https://investmentpolicyhub.unctad.org/InvestmentLaws/laws/186, accessed 26 February 2019.
37 ‘Favorable Tax Environment for Foreign Investors in Azerbaijan’, available at: http://www.taxes.gov.az/modul.php?name=pages&page=231, accessed 26 February 2019.
38 For a list of the 51 bilateral investment treaties see: ‘Azerbaijan’, Investment Policy Hub, available at: https://investmentpolicyhub.unctad.org/IIA/CountryBits/13#iiaInnerMenu, accessed 6 March 2019.
39 ‘Frontera Resources Azerbaijan Corporation v. State Oil Company of the Azerbaijan Republic’, 2009, available at: http://caselaw.findlaw.com/us-2nd-circuit/1352726.html, accessed 8 January 2018.
40 ‘Azerbaijan 2013 Country Report’, Political Risk Services, 2014, available at: https://www.ebsco.com/products/research-databases/business-source-complete, accessed 8 January 2018.
41 ‘Azerbaijan 2013 Country Report’, Political Risk Services, 2014, p. 2, available at: https://www.ebsco.com/products/research-databases/business-source-complete, accessed 8 January 2018.
42 ‘Azerbaijan 2013 Country Report’, Political Risk Services, 2014, p. 2, available at: https://www.ebsco.com/products/research-databases/business-source-complete, accessed 8 January 2018.
43 ‘Investment Climate Statements for 2016: Kyrgyz Republic’, US Department of State, available at: http://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/index.htm?year=2016&dlid=254483, accessed 8 June 2017.
44 Investment Climate in Kyrgyz Republic: Views of Foreign Investors (Washington, DC, World Bank, 2015), available at: http://documents.worldbank.org/curated/en/259411467997285741/Investment-climate-in-Kyrgyz-Republic-views-of-foreign-investors-results-of-the-survey-of-foreign-investors-operating-and-non-operating, accessed 8 June 2017.
45 Investment Climate in Kyrgyz Republic: Views of Foreign Investors (Washington, DC, World Bank, 2015), available at: http://documents.worldbank.org/curated/en/259411467997285741/Investment-climate-in-Kyrgyz-Republic-views-of-foreign-investors-results-of-the-survey-of-foreign-investors-operating-and-non-operating, accessed 8 June 2017.
46 Doing Business 2017, World Bank, available at: http://www.doingbusiness.org/reports/global-reports/doing-business-2017, accessed 3 January 2018.
47 ‘Investment Climate Statements for 2016: Kyrgyz Republic’, US Department of State, available at: http://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/index.htm?year=2016&dlid=254483, accessed 8 June 2017.
48 ‘Kyrgyz Leader Vows “Tough” Measures over Gold Mine Dispute with Canada’, BBC Monitoring Central Asia Unit, 27 October 2014, available at: http://0-www.lexisnexis.com.library.wofford.edu/hottopics/lnacademic/, accessed 4 January 2018.
49 ‘Centerra and Kyrgyzstan to Reach Agreement on Kumter Gold Mine (Part 1)’, The Times of Central Asia, 21 August 2013.
50 ‘National Trade Estimate Report on Foreign Trade Barriers, Kazakhstan’, Office of the United States Trade Representative, 2014, available at: https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2014-NTE-Report, accessed 4 January 2018.
51 ‘Azerbaijan Anonymous: Azerbaijan's State Oil Company and Why the Extractive Industries Transparency Initiative Needs to Go Further’, Global Witness, December 2013, available at: https://www.globalwitness.org/sites/default/files/library/azerbaijan_anonymous_lr.pdf, accessed 8 January 2018.
52 ‘The First Lady and a Jailed Journalist’, The New York Times, 6 May 2016.
53 ‘Azerbaijan 2015 Country Report’, Political Risk Services, 2016, p. 6, available at: https://www.ebsco.com/products/research-databases/business-source-complete, accessed 8 January 2018.
54 ‘The Truth behind the Recent Unrest in Kyrgyzstan’, Business Insider, 14 April 2010, available at: https://www.businessinsider.com/causes-of-unrest-in-kyrgyzstan-2010-4, accessed 27 February 2019.
55 Nations in Transit 2017: Kyrgyzstan, 2017, available at: https://freedomhouse.org/report/nations-transit/2017/kyrgyzstan, accessed 8 June 2017.
56 Deichmann et al. (Citation2003) find that economic reforms and stability are an important factor in attracting foreign investment in postcommunist states.
Additional information
Notes on contributors
Rachel Vanderhill
RACHEL VANDERHILL, Department of Government and International Affairs, Wofford College, 429 North Church Street, Spartanburg, SC 29303, USA.
Sandra F. Joireman
SANDRA F. JOIREMAN, Department of Political Science, University of Richmond, 202 Weinstein Hall, 231 Richmond Way, Richmond, VA 23173, USA. Email: [email protected]
Roza Tulepbayeva
ROZA TULEPBAYEVA, Independent Scholar. Email: [email protected]