WESTCHESTER, New York — Despite being a country having rich natural resources and economic potential, still has complications with poverty. Despite having economic growth in recent years, poverty is still a concern for a portion of the population. The inequality between urban and rural areas, as well as regional disparities contribute to poverty in this country.
An interview with World Bank Senior Economist for Central Asia William Seitz discusses numerous things about poverty in Kazakhstan such as distribution of wealth and how people calculate poverty.
Poverty Comparison in Kazakhstan
In the year 2022, the poverty rate in Kazakhstan is at least 15%, but compared to other Central Asian places it has the lowest poverty rate. While Kazakhstan was one of the very few highest performing countries in the world against poverty, its progress became more limited over these past few years. The main reason for this is due to a multitude of bumps that have tampered with economic growth and income. The World Bank has estimated that the poverty rate has fallen by 61% in 2004 to 14% in 2013. Throughout the slowing of the economy and oil prices decreasing, the poverty rate increased to at least 24% of the population in 2016. However, the recent COVID-19 pandemic pushed more than 1 million Kazakhs into poverty. However, in Kazakhstan, this was temporary and the poverty rate began to fall in 2021.
The Calculation of Poverty and its Changes
According to the World Bank interview, “There are common types of monetary poverty measures which are internationally comparable poverty measures and national poverty measures.”
Global poverty estimates that the World Bank audits are purposely separate from those that national governments audit. The most important reason for having multiple sets of indicators is comparison methods. Because they are being tailored to a certain context these national forms of measurements are not compatible with practices in other countries. Forms of comparison across countries need a coordinated approach, such as that by the World Bank. The World Bank has updated all poverty estimates that it had made in 2022 with a new set of poverty lines. It has also used global estimates of living cost poverty measures for local conditions to make them comparable. However, Central Asia does not use it as much.
The World Bank interview also stated that “For lower middle-income countries such as Uzbekistan, the poverty line was almost 600 tenge per person in 2021, and for upper middle income countries like Kazakhstan the poverty line was at least 1,000 tenge per person.”
Distribution of Wealth
The William Seitz interview stated that “Kazakhstan is ranked amongst the most equal countries in the world authority to income measured in house surveys. The Gini index value for this country was 0.294 in 2021 which suggests that income is equally distributed.”
This predicament has high concern for inequality with low measured inequality is due at least in some of the challenges of getting accurate income measures. The underreporting of income amongst high earners and low labor share means that survey measures of inequality bring incomplete information.
“As stated by the World Inequality Database, the top 1% of people who receive income in Kazakhstan made up 15% of the total income in 2021. The contrast with wealth inequality is more noticeable, with the top 1% making up at least 30% of wealth in comparison to 5% for the bottom half of the population.”
Inequality can also be connected to differences in region and rural-urban disparities. In 2022, Atyrau recorded 3.5 times as much income than Turkestan. Other large countries such as the United States have less of a disparity. Different measures of one’s well being are low in rural areas where services are limited. These rural areas usually have complications like lower average incomes and less access to clean water.
The Human Capital Index for Kazakhstan shows noticeable contrasts in education quality. Beings from families who are economically disadvantaged are behind advantaged people by at least 3 years of schooling.
“When this index was last measured Kazakh children were expected to have 63% of human capital. But a child born poor was expected to at least have 53%,” said the World Bank interview.
Forecasts of the World Bank on Poverty in Kazakhstan
The World Bank team expects poverty to decline in Kazakhstan and Central Asia. Growing economies give additional income making chances for people and income from work is far and one of the most important factors that reduces poverty. Economic growth also makes more resources that can help support those who are not up to societal standards.
The interview indicated that “If Kazakhstan can keep strong economic growth the World Bank expects their poverty rate to fall to about 12% in 2024. However there are risks to poverty reduction in Kazakhstan. Past downturns of the economy have increased the poverty rate. Improving the social safety net so that it will have a quick response to downturns will make less people fall in poverty.”
This is one of the most important things a country can do to ensure progress over many years.
Despite being a country with good economic potential and having access to great resources, it still has issues with poverty with smaller portions of its population.
COVID-19 cut a subsequent recovery short in 2020 that again pushed as many as 2 million Kazakhs into poverty, with poverty rates rising around the world. Thankfully, in Kazakhstan this proved temporary in most cases, and the poverty rate began falling again in 2021.
This pattern—spurts of progress followed painful reversals—highlights the importance of a social safety net to prevent people falling into poverty during economic downturns.
Despite being a country having rich natural resources and economic potential, still has complications with poverty. Despite having economic growth in recent years, poverty is still a concern for a portion of the population. The inequality between urban and rural areas, as well as regional disparities contribute to poverty in this country.
The Work of Salem Social Village
In 1996, a nonprofit organization called the Salem Social Village began. This organization works with young people through learning and group gatherings so that they can invest in better practices and leaders to reduce poverty in Kazakhstan. So far, it has made more than $100,000 CAD in donations toward eliminating poverty.
Kazakhstan’s Success Reducing Poverty
Kazakhstan has achieved large reductions in poverty since 2006 from 35% to 8% in 2017. Despite this, many people in Kazakhstan still remain in poverty to this day.
A way Kazakhstan has combated poverty is by giving citizens who are below the poverty line Targeted Social Assistance (TSA). So far, in 2018, TSA has helped 600,000 people in poverty, which then increased to 2 million people in 2019.
– Hailey Spencer