Center of the new Silk Road Kazakhstan is located in the center of the new Silk Road linking Asia and Europe.
In the near future the three economic blocs will form the world economy: North America, Asia and Europe. On a global GDP of $ 75 trillion. dollars. United States, Europe’s GDP is 20 trillion dollars., and Asia’s GDP is close to 30 trillion. Dollars.
Kazakhstan is situated between Europe and Asia; in fact, the Horgos border post between China and Kazakhstan, where the trans-shipment of containers, so they continued on their way to Western Europe, is a symbolic transit point between Asia and Europe. The middle class in East and South Asia is also growing, and with it the demand for consumer goods. Suddenly, Kazakhstan at the center of that part of the world, which owns almost two-thirds of the world’s GDP. It can be a major part of the new Silk Road, which will promote economic relations between Asia and Europe, and within Asia itself. The main question now is – how best to realize this potential.
To achieve the status of a country with high income will require a strong private sector that will be able to use this feature. Kazakhstan, whose economies with an income above average, may soon reach the level of high-income countries, if it exercises and geo-economic position will change the balance of its economy. When the US per capita GDP of a little more than $ 7,500. (2016 nominal), Kazakhstan can become a country with a high level of income for six years, if the return to its previous growth rate of 7 percent.
However, past development strategy based on the simple use of natural resources, it will not be enough. Kazakhstan needs to find new sources of economic growth and reform the fundamental elements of its current economic model. One of the main areas for reform of the financial sector of Kazakhstan is – a source of both growth and vulnerability. Based on the experience of successful countries, Kazakhstan reaches the status of a country with a high level of income, if he reveals the potential and use of both external and internal resources of the private sector. Traditional financing for development-led government cannot provide enough resources for Kazakhstan to achieve a high level of development. As in other parts of Asia, it is the private sector – with the help of state-designed 4 programs and election of public investment – will lead Kazakhstan to the status of high-income countries.
However, financing for development can help to support the development of markets through a combination of knowledge, lending and individual investments of the private sector. If this is done correctly, the millions of dollars of development finance can be used to mobilize billions of dollars of private sector investment. Changing the balance of China – it is an opportunity for Kazakhstan to change the balance of its own economy. China’s economy is driven by exports of manufactured goods, while domestic consumption is low opposite in Kazakhstan. China’s economy is gradually shifting towards domestic demand and a rapidly growing middle class (.
Which is forecast to reach 1 billion by 2025), Kazakhstan could become an important part of the supply of grain to China – the same economic position of Canada relative to the United States. Instead of one-way trade from China to Kazakhstan and through it, a change in the economic balance in Europe and Asia will create more opportunities for bilateral trade. But to get the most benefit from trade with China and other economies, Kazakhstan should carry out a fundamental reform of the key non-oil sectors, especially agriculture, agriculture and transport. The Government recognizes the urgent need for such reforms. The Strategic Plan of Kazakhstan attaches particular importance to a diversified and competitive economy, relying on educated and interested people. This will require a dramatic increase in performance, a dynamic labor market, creating jobs, as well as the rapid growth of non-core activities.
Revival of land transport will make Kazakhstan a natural transit corridor of the new Silk Road. Future economic progress will depend on the efficiency and speed. Therefore, most likely, maritime transport will experience a slight increase in comparison with other, more rapid forms of transport, while air transport will remain too expensive for most goods.
Kazakhstan can exploit the situation, because most of the efficiency will increase in road and rail transport, where the average time of transportation of one container from China to Western Europe still accounts for 14 days. There are a significant number of opportunities to reduce costs and reduce the time in the train and in road transport to less than one week. New technologies, including self-managed trucks, transport and logistics will make the next revolution in transportation, as it becomes easier and easier to consolidate and deliver the goods, as well as to drive vehicles 24 hours a day.
The success of Kazakhstan in the ability to take advantage of his position will depend on its success in attracting foreign direct investment for the development of modern transport and logistics. Selection of target industries – where is hidden the greatest potential? This report identifies the types of private sector operations in Kazakhstan, which have the greatest potential for development. Wheat is the staple consumed by all sectors of society, both rich and poor.
Consumption of a growing middle class throughout Asia, especially in China, will boost demand for wheat. To master these new markets, Kazakhstan needs to increase its exportable to boost exports. It is possible to increase productivity by more than 100 percent. Pay attention to, that wheat is already one of the top non-oil export products, export of wheat output to new markets such as China, also significantly diversifies the economy.
Moreover, Kazakhstan also has the option of using its more competitive products from wheat to provide a feed for domestic livestock. Since the size of the middle class in China and South Asia continues to grow rapidly, the demand for more expensive meat products will be expanded. Given the huge expanses of pasture, feed availability (including wheat), low production costs and proximity to potential markets, Kazakhstan has all opportunities to increase exports of livestock and livestock products in processed form. This gives an opportunity for Kazakhstan to diversify their exports and create jobs, including in the national / regional value chain and have access to the value chain of higher quality. However, to maximize the benefits of regional value chains need to carry out reforms in order to realize the full potential of transport and logistics. Kazakhstan is a natural transit corridor for the new Silk Road.
Rail and road transport will survive the second birth as a result of shifting production to the western part of China more expensive eastern part of the country. Currently, Kazakhstan accounts for only a small part of the potential container traffic between China and the EU, only one percent of total transits through the country. In reforming the sector technological innovation (eg, semi-autonomous cars) can significantly reduce the time and cost of transportation, which would make alternative transit through Kazakhstan is much more attractive. Also, reform will create new opportunities to increase trade with Iran and the Middle East, as well as fast-growing countries of South Asia. Higher speeds will open in logistics rapid growth opportunities for the agricultural sector of Kazakhstan, including wheat and perishable animal products. More efficient trade will lead to higher competitiveness of wheat and livestock, and economies of scale will create new demand for more sophisticated transport and logistics services and related professional services.