Rethinking Kazakhstan’s Strategy for Growth and Development:

New Policies toward Foreign Direct Investment and Supply Chain Expansion

Theodore H. MoranGeorgetown University

Eighty percent of all trade flows today

take place as inter-affiliate transactions

within multinational corporations or

within supply chains organized by

multinationals.

Emerging market economies that are able

to use foreign direct investment to upgrade

and diversify their economies grow more rapidly

and enjoy greater welfare gains.

Comparative evidence shows that

FDI is attracted to areas that offer a

skilled labor force, technicians,

and managers.

A fast shortcut is for investment promotion

authorities to offer help in creating

public-private partnerships between

investors and host vocational training programs.

Comparative evidence also shows

that local content requirements are

an impediment to attracting FDI.

A more effective strategy

is to reward investors who designate

a “talent scout” or “marriage broker”

to search for local suppliers.

The host sets up data registries of

indigenous firms and works with foreign

investors to design certification programs

to help local companies qualify as suppliers.

Kazakhstan should continue

to improve doing business indicators,

simplify FDI regulatory procedures,

increase access to finance,

Upgrade infrastructure around industrial zones,

streamline procedures for foreigners

to get work visas and work permits,

follow through on the investors’ court.

Kazakh authorities might select three

priority sectors to concentrate on harnessing

FDI to the creation of supply chains with local

private sector and public sector Kazakh firms.

Within these priority sectors, the first

recommendation is to shift from local

personnel quotas to creation and

strengthening of public-private

partnerships for vocational training.

The second recommendation is to shift

from local content mandates to

rewards for foreign investors who

designate talent scouts or marriage

brokers who seek out local supplier firms.

The goal is to create three demonstration sectors

in which FDI is used to create supply chains

with powerful demonstration effects to help

attract new investors

in other sectors in the Kazakhstan economy.

Thank you.

I am eager to hear

your comments

and reactions!