Equitable Human Capital Is a Top Priority for Kazakhstan

NUR-SULTAN, April 29, 2021 – The COVID-19 pandemic has negatively affected Kazakhstan’s progress in strengthening human capital, warned experts during a virtual roundtable this week organized by the World Bank and the Agency for Strategic Planning and Reforms under the President of the Republic of Kazakhstan. The discussion aimed to facilitate a holistic and equity-oriented policy dialogue for informing investments and strategic plans to boost skills and productivity in the country.

Human capital is the knowledge, skills, and health that people accumulate throughout their lives, which enable them to realize their potential as productive members of the society. From 2017, the World Bank has led on a global effort on the human capital development to accelerate more and better investments in people for greater equity and economic growth.

During the event, the World Bank presented key findings of the Equitable Human Capital Development Framework Report for Kazakhstan that showcase declining productivity, growing inequality in the regions, as well as deteriorating health indicators amongst the population.

While Kazakhstan has made impressive economic progress, largely driven by rising exports of oil and gas and increasing productivity, since 2009 the country has seen a marked slowdown in economic growth. Contribution of the human capital to the Kazakh economy beyond extractive industries significantly went down, limiting the country’s ability to produce high-value products.

Today Kazakhstan’s economy lags in some key measures of innovation and competitiveness, and the state of skills development in the country is lower than in countries of the Organization for Economic Co-operation and Development (OECD). Moreover, the COVID-19 pandemic has significantly lowered domestic economic activity with GDP falling from 4.1% in 2019 to 2.6% in 2020 and the poverty rate increasing from 6% in 2016 to 14 percent in 2020. Building back from this economic shock requires strategic and targeted reforms to diversify the economy into more complex, skill-based sectors in order to meet Kazakhstan’s 2050 goals.

“COVID-19 has significantly undermined human capital development gains in Kazakhstan achieved over the last decade. The poorest and the most disadvantaged have been hit the hardest, and this will negatively impact their lifelong learning, future earnings, and socio-economic well-being. For Kazakhstan to enjoy sustainable growth, public policies and investments need to cater to the needs of the poorest and most disadvantaged regions and people. Greater emphasis is needed on the quality of education, skills development, and adult survival”, said Ayesha Vawda, Lead Education Specialist at the World Bank Office for Central Asia.

The report argues that there are substantial inequalities in human capital indicators across regions, gender, and in terms of socio-economic status in Kazakhstan. A child born in the richest 20 percent of households in the country can expect to accomplish 64 percent of his/her productivity, compared to 53 percent for a child born in the poorest 20 percent of households. The regional difference is especially profound in learning outcomes. For example, the HCI score for Atyrau is equal to that of much poorer countries such as Kosovo and Georgia. In contrast, the highest regional HCI score – Nur-Sultan City – is equal to that of Luxembourg and just below that of the United States. Quality of education and education expenditures also differ significantly across the country’s regions. Education policies and financing disincentivize teachers and school leaders to support low achievers. Also, despite ongoing health reforms, there are huge gaps between Kazakhstan and OECD countries in terms of quality control of risk factors, appropriate treatment delivery, and equality of health expenditures across regions.

“If the country continues to strengthen its human capital at the same pace as it did in 2010-2020, it will take 44 years to reach the levels of the 30th ranked country for GDP per capita, assuming the rest of the world does not grow. To join the ranks of the top 30 economies of the world, Kazakhstan will need to revise its economic model, moving aggressively into economic diversification, and building the skills of its next generation-all of them,” said Lilia Burunciuc, World Bank Regional Director for Central Asia.

In his speech, Kairat Kelimbetov, Chairman of the Agency for Strategic Planning and Reforms under the President of the Republic of Kazakhstan, highlighted “Human development has been identified as a priority in all high-level strategic documents endorsed by the President of the Republic of Kazakhstan. In particular, the new system of state planning, the updated National Development Plan 2025 and the new Concept of Public Administration 2030 are all human oriented meaning that all activities under the specified reforms target to improving the life of each country resident as an ultimate goal. The implementation of the National Development Plan until 2025, among other things, is aimed at recovery from the pandemic and improvement of human capital. Based on this document, the reforms will be carried out in all the spheres.”

Both international and national experts agreed that strengthened human capital, as reflected in improved health, education and social protection outcomes would support economic transformation by allowing the economy to move towards skills-based sectors, increasing labor productivity and adaptability to the global knowledge-based economy.

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