open access

https://hdl.handle.net/2115/38969

Diversification of Industrial Organization and Corporate Governance in the Republic of Kazakhstan : A Case Study on the Government-Business Relationship in Transition

日本語

2001

北海道大学スラブ研究センター

Slavic Studies

48

29-65

Republic of Kazakhstan representing an exponent of the five Central Asian states is a country where sweeping structural reforms proceed in socio-economic sphere towards a capitalist economic system. In the beginning stage of transition, Kazakhstan nevertheless was a follower of some FSU countries including Russia and the Kyrgyz republic due to hesitation in implementing several important measures. However, after the Kazakhstani government and IMF came to an agreement on macro stabilizing policy package in the end of 1993, the country had rapidly accelerated deregulation of economic activity and privatization of state-owned firms. By virtue of great efforts made under the authoritarian leadership of President Nazarbayev during 1994-98, Kazakhstan now bears comparison with other reforming countries with regards to the degree of decentralization of economic system. It is obvious that deregulation of price, trade and foreign exchange is a necessary, but not a sufficient requirement for crafting a market-oriented society. As I stressed in the preceding paper upon Kyrgyzstan (see Slavic Studies, No.47, pp.37-69), so as to activate decentralized economic system, a competitive industrial organization has to be combined with freed economic circumstances. In addition, mutual relations between the government and business entities ought to be coordinated to complement this institutional coordination simultaneously. This is a rudimental analytical view of the author. It is no doubt that there is a virtual unanimity for the proposition that the privatization of state property gives a momentum for generating significant changes in industrial organization, corporate governance and government-business relationship of the post-socialist countries. Therefore, the article attempts to view these three aspects seriatim with tracing privatization policy and its main consequences in Kazakhstan in order to examine whether or not this country has establish desirable economic structure. In this paper, the achievements of Kazakhstani government in the field of the legislation of new laws concerning enterprise activities and the deregulation policy are briefly mentioned in section 1. The second section describes a basic framework of the privatization of stateowned firms and its outcomes in 1992-98. The organization form of newborn institutional investors including state holding companies and investment privatization funds (IPFs), and their impacts on diversification of industrial organization and corporate governance are elaborated in section 3. Restructuring process of the government-business relationship is treated in section 4. And in section 5, by utilizing microdata of 768 industrial firms, the author conducts an empirical analysis in order to compare their actual behaviors with the main presumptions to which foregoing three sections reach. The article draws the following conclusion: The three-stage privatization implemented during six years after collapse of Soviet Union could dramatically change the ownership structure of industrial sector for the benefit of private investors and entrepreneurs. IPFs and other private investment companies as well as foreign capitals became major stockholders and/or managers of many privatized firms. It is noteworthy that some of them have laid the foundation of so-called industrial-financial groups, which began to make inroads into so far impregnable monopoly markets dominated by sectional state holding companies. Thereupon, the significant diversification of industrial organization and corporate governance was incarnated and to some extent the intensification of managerial discretion has also proceeded. Notwithstanding such positive achievements in the industry, new mechanisms of governance did not work out due to some unsolved problems including increasing inter-enterprise arrears and underdevelopment of financial sector, both of which are vital for new institutional investors. As a consequence, the government remains most important stakeholder for even privatized firms and retains great influence in industrial decentralization. Hence a reorganization of the government-business relations is recognized as a key element to predict whether Kazakhstan will promote indispensable conditions for competition in industry further. Indeed, in this connection the central government actually has taken some drastic measures to restructure its management system to adjust systemic transformation process. By way of illustration, the government executed extensive integration of its organs and introduced strict regulation regime against an arbitrary intervention by state agencies and officials into private business activities and so forth. However, the effort for creating more neutralized relationship between the state and business is seriously spoiled by an informal mechanism institutionalized on the top level of the state. The most powerful seven business groups virtually represent most of gigantic enterprises in Kazakhstan and enjoy exclusive apportioning of economic interests by occupying primary positions in the cabinet of ministers and government offices. The scale of their political activities is difficult to gauge. Albeit this fact, it is without doubt that they are so influential on decision-making process of the government that there is no warranty to secure a fair competition in this country even in case if privatization policy will make a significant progress from now on. Summarizing all aforementioned aspects, the author urges that the Kazakhstani government should make strenuous efforts to rectify the weakness of the institutional coordination for promoting a market economy now and otherwise in the near future, the country will lose its ascendancy of economic system over other Central Asian states. In a sense, Kazakhstan may have to negotiate more steep and dangerous path of systemic transformation than before.

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0562-6579

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