Convergence across Kazakhstan regions.
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The issue of regional economic disparities is important for the Republic of Kazakhstan, which is going through a transition period from a planned socialist system to a market-based economy. This presents a large number of problems for a government seeking to balance development in order to avoid problems of inequality and political unrest and, at present, there is a shortage of the type of information that would be useful to formulate policy. The main aim of this thesis is to help make up some of this gap. It does so by examining various types of convergence process across the regions of Kazakhstan over the period of 1993-2009. Since different types of convergence reflect different aspects of the problem, we use a variety of concepts and empirical approaches in studying convergence across Kazakhstan's regions. First, we approach convergence directly by studying the dynamics of standard deviation and coefficient of variation of per capita GRP level across Kazakhstan's regions, which is called -convergence. Next, we study absolute and conditional -convergence using cross-section and panel approaches. Afterwards, we study the club-convergence proposing an approach that consists of two stages: clustering of regions and testing convergence within clusters. In studying TFP convergence, we use panel unit root tests. In addition, we apply the method of sector decomposition to reveal economic sectors, which promote either convergence or divergence across the Kazakhstan regions. The results of this thesis show that, in general, regions of Kazakhstan diverged over the period of 1993-2009 in the sense of -convergence and absolute -convergence. However, they demonstrated convergence in other recognised forms of convergence (conditional -convergence, TFP-convergence, club-convergence) over various time spans within the 1993-2009 period. For the government this means that convergence in Kazakhstan is not per se a process that accompanies economic development and that a strong regional policy is needed. In order to reduce economic disparities and preserve high rates of economic growth this policy should be complicated, club-specific, and directed to the equalization of production structure of regions and targeting the sectors promoting convergence.