Economic Divergence and Development Efforts in Former Soviet Republics:
A synopsis on economic transition in Russia and Kazakhstan
IS-337WX: Comparative Paper II
Daniel Bradford
1 May 2014
Help Received:
Chicago Style Citation Machine,
Footnoted Citations,
& Comparative Paper II
The former Soviet Republics of Russia and Kazakhstan exercised different roles in the
process of Soviet collapse. As illustrated in the first installment of this comparative project, the
republic of Russia was an active participant in the process that led to Soviet dissolution, while
Kazakhstan was a much more passive participant in the process. Variance in economic status
between the two former republics can help explain for the divergence in the roles that two played
during the Soviet collapse process. The economic transitions that both states have endured since
the collapse of the Soviet Union have also been divergent. I argue that differences between the
economies of the modern independent states of Russia and Kazakhstan can best be explained by
analyzing the economies of the two former republics. The economy of the former Russian
republic was much more advanced and prosperous than that of the for Kazakh republic. I argue
that the differences between the development and status of the economies in the two former
Soviet Republics has impacted and allowed the two independent states to experience diverging
economic transitions in their post-Soviet years.
Guidepost for Comparison
I begin my comparative analysis by reviewing the economies of Russia and Kazakhstan
when they were Soviet Republics. Next, I analyze the economies and development levels in the
Independent states of Russia and Kazakhstan. I then seek to explain how the variance of
economic development in the former republics has led to a divergence in the economic
transitions that the independent states of Russia and Kazakhstan have endured since the collapse
of the Soviet Union.
Economic Development in the Soviet Republics of Russia and Kazakhstan
The different levels of economic development in the Russian and Kazakh republics can
help explain the different levels of participation from each republic, regarding the roles they
Bradford 1
played in the process of Soviet collapse. In this section of my analysis, I examine the economies
of Russia and Kazakhstan when the states were Soviet Republics. As I will show, the economy
of the former Russian republic was much more developed and robust than that of the former
Kazakh republic. This impacted the roles that each state would play in the process that brought
about Soviet demise and, as I show later, it would eventually influence the economic transition
that occurred in both post-Soviet states. I begin my analysis on the economies of the former
republics with Russia.
Under the Soviet Union, Russia was the largest of all fifteen Soviet Socialist Republics.
The Russian republic, as Henry Hale explains, was a core ethnic region in the ethnofederal
structure of the Soviet Union “that was clearly dominant in terms of population, containing a
majority of the union’s citizens.”1 Thus, it comes as no surprise that the Russian republic was the
center of economic activity for the all union command economy of the Soviet Union. By opening
up Soviet society and implementing political and economic reforms, the two key reforms of
Mikhail Gorbachev, which were Glasnost and Perestroika, fostered discontent in the Russian
republic. Resulting from the openness produced by Glasnost, as noted by Mark Beissinger,
Russians, “who constituted a disproportionate share of the Soviet intelligentsia and working class
relative to most other nationalities”, realized the abuses they had been receiving from the all
union command economy of the Soviet Union.2 The Russian republic was economically
exploited by the Soviet Union and more so than other republics because of Russia’s relatively
industrialized and developed economy. As Hale notes, “Russia was a net donor to the rest of the
1
Hale, Henry. "The Makeup and Breakup of Ethnofederal States: Why Russia Survives Where the USSR Fell,"
Perspectives on Politics. no. 1 (2005): 56.
2
Beissinger, Mark. "Nationalism and the Collapse of Soviet Communism." Contemporary European History. no. 3
(2009): 342.
Bradford 2
union despite the other republic’s claims of exploitation, primarily because it supplied oil and
gas to them at far-below-market prices.”3
The former republic of Russia represented the core ethnic region and most developed
republic in the Union of Soviet Socialist Republic. The capital of the Soviet Union was located
in the Russian republic and so was the union’s primary center of economic productivity. As
explained above, by being the most industrialized Soviet Republic, Russia was subsequently the
most exploited. Gorbachev’s reforms sparked Russian grievances because it allowed the republic
to realize the economic disadvantages and exploitations, relative to other Soviet Republics, that it
faced in the Soviet system. Russia’s perceived economic disadvantages were a motivating force
that allowed the union to play an active role in the process of Soviet collapse. Boris Yeltsin, the
charismatic leader of the Russian republic during Soviet collapse, highlighted Russia’s perceived
economic disadvantages and used them to legitimize his actions. As Henry Hale explains, “much
of Yeltsin’s activity as Russian Republic leader can be understood as an attempt to permanently
rectify…[the] disparity between Russia’s dominance in population and territory and its perceived
disadvantages in terms of economic policy.” Relative to the other fourteen Soviet Republics, the
Russian economy was developed and it contained the infrastructure that drove the all union
command economy of the Soviet Union.
Development in Kazakhstan and the overall status of the former republic’s economy was
much different than that of the Russian republic. Kazakhstan is one of the five states that
compose the region of Central Asia, which was the most underdeveloped region in the USSR. In
comparison to Russia, Kazakhstan and the other Central Asian republics played very different
roles in the process of Soviet collapse. Kazakhstan and the Central Asian republics did not
3
Hale, Henry. "The Makeup and Breakup of Ethnofederal States: Why Russia Survives Where the USSR Fell,"
Perspectives on Politics. no. 1 (2005): 59.
Bradford 3
possess strong secessionist sentiments. As Brent Hierman explains, the collapse of the Soviet
Union brought Kazakhstan and the four other Central Asian republics “something that the elites,
and seemingly much of the population had not demanded, wanted, nor prepared for: their
independence.”4The Central Asian republics, did not assert demands for sovereignty because
they were reliant upon the Soviet system and its all union command economy. As Stephan
Kotkin proclaims, up until the end, “almost all of Central Asia’s leaders maintained hope that the
Union could be saved…”5 This is true for the leader of Kazakhstan because as Kotkin notes,
“even during his campaign for the new Kazakh presidency in 1991, Nazarbaev resisted calls for
complete independence.”6 The Kazakh republic, similar to the other republics in the region of
Central Asia, was underdeveloped and it lacked the infrastructure needed for its economy to
prosper. Thus, the Kazakh republic was unlike Russia, who sought independence because of
perceived economic disparity, because the Kazakh economy benefitted from being apart of the
Soviet socialist system and the modes of production that it entailed. The economy of the Kazakh
republic was ill prepared for independent statehood and it suffered during and after the republic’s
abrupt transition to independence.
When compared, the Russian republic was much more developed and industrialized than
the republic of Kazakhstan. The economy of the former Russian republic suffered under the
Soviet Union because it was being exploited by the union’s socialist system. The economy of the
former Kazakh republic benefitted under the socialist system because it was very
underdeveloped and it lacked the infrastructure needed for economic prosperity as an
independent state. The variance of economic development in the two former republics impacted
4
Hierman, Brent. Understanding the Unpredictable Stability of Post-Soviet Central Asia. Unpublished manuscript
Stephen Kotkin, Armageddon Averted: The Soviet Collapse 1970-2000, (New York: Oxford University Press,
2008), 106.
6
Ibid.
5
Bradford 4
and shaped the roles that each would play in the process of Soviet collapse and it would later
shape the economic transition that each state endured after the Soviet collapse.
Economic Status in the Independent States
In this section, I analyze the modern economies in the independent states of Russia and
Kazakhstan. I focus on the current levels of economic development in the two states and I
analyze the reasons for the different development levels in the following section. I begin my
analysis by analyzing the modern economy of Russia and I end by examining the economy of
Kazakhstan.
The current economy of Russia has experienced many reforms and attempts at reform
during the years following Soviet collapse. As noted by the Center for Strategic and International
Studies (CSIS), “There is no aspect of contemporary Russia that has change more rapidly and
unexpectedly than its economic situation.”7 As a result of the many reforms, the Russian
economy has experienced periods of growth and decline. As of 2010, never before “has Russia
been more prosperous or integrated into the global economy than it is now.”8 That being said,
Russia’s economy has been on a downward trend in recent years. As noted by Nathan Toohey,
“The Russian government has demonstrated little if any commitment to economic reform in
recent years, and the country’s economic freedom score remains stuck at the lower end of the
‘mostly unfree’ category.”9 Since becoming independent, the economy of Russia has thrived and
suffered for many reasons. Yet, as I will show, it has endured much more prosperity than
Kazakhstan.
7
Center for Strategic and International Studies. "Economic Change in Russia." Center for Strategic and International
Studies. http://csis.org/program/economic-change-russia (accessed May 1, 2014).
8
Ibid.
9
Toohey, Nathan. "Index of Economic Freedom says Russia 'stuck' at 'mostly unfree' level." The Moscow News.
http://themoscownews.com/business/20120113/189366041.html (accessed May 1, 2014).
Bradford 5
The abrupt transition to independence that Kazakhstan endured would influence the way
the state developed and the regime type that it would adopt. State formation, as noted by Anna
Grzymala-Busse and Pauline Luong, is defined as “elite competition over the authority to create
the structural framework through which policies are made and enforced.”10 The two authors
proceed to note that the “rapid nature of post-communist state-building also serves to privilege
[the] elites participating in the initial stages of the transition.”11 All is true of the personalistic
state-building process that took place in Kazakhstan and in Central Asia. The personalistic statebuilding process led the states to adopt authoritarian regimes. Specifically, Kazakhstan embraced
neopatrimonialism, which Brent Hierman notes, involve regimes that “combine the shell of
formal, modern, bureaucratic state with informal institutions such as clientelistic ties between
elites and supporters.”12 Central power in neopatrimonial regimes is centered around the
executive, but Nicholas Kunysz argues that executive power “is limited by the indirect power
relations between the central executive and local authorities who are divided by middle-ranking
governors and who in exchange for loyalty to the central authority are able to manage their own
local patronage networks…”13 The unexpected transition to independence forced elites to rely on
informal networks to execute state formation and gain/maintain political power. These informal
networks (which have included clientelistic ties/relations, patronage networks, and/or other
informal practices) have largely persisted in Kazakhstan and in the region of Central Asia as a
whole.
Anna Grzymala-Busse and Pauline Jones Luong, “Reconceptualizing the State: Lessons from Post-Communism,”
Politics Society (December 2002): 531.
11
Ibid., 535.
12
Hierman, Unpublished manuscript.
13
Nicholas Kunysz, "From sultanism to neopatrimonialism? Regionalism within Turkmenistan," Central Asian
Survey (January 2012): 2.
10
Bradford 6
The informal networks and nature of the neopatrimonial regime in Kazakhstan has kept
the state’s economy from fully developing. The state’s lack of development is not a result of
Kazakhstan being devoid of economic resources. According to Eric McGlinchey, Kazakhstan
has substantial access to natural resources because of the “vast oil wealth” that resides within the
borders of the state.14 The state has been unable to fully develop because of elite corruption and
the neopatrimonial nature of the regime. Governing elites control access to the state’s resources
and only those that have informal ties with them can potentially access these resources.
Kazakhstan and the region of Central Asia as a whole have suffered from the informal practices
that define the neopatrimonial regimes that exist in the region.
Explanations for Diverging Economic Transitions
The differences between the development and status of the economies in the two former
Soviet Republics has impacted and allowed the two independent states to experience diverging
economic transitions in their post-Soviet years. The economy of the former Russian republic was
much more prepared for independent statehood than that of Kazakhstan. Kazakhstan’s economy
was very underdeveloped and it was reliant upon Soviet socialism for economic support. In
contrast, Russia’s economy was the economic backbone of the all command economy of the
Soviet Union and Russia pushed for sovereignty because of perceived economic disadvantages
under the Soviet system. Thus, Russia was more prepared for independence and so was its
economy. Kazakhstan did not want independence because its economy benefitted from the
socialist system. Thus, by not demanding or expecting the independence it received, Kazakhstan
and its economy were unprepared for independent statehood. This forced elites in Kazakhstan’s
state-building to utilize informal practices as a means to build independent state institutions. The
14
Eric M. McGlinchey, Chaos, Violence, Dynasty: Politics and Islam in Central Asia (Pittsburgh: 2011), 30.
Bradford 7
processes lead the state to embrace neopatrimonialism and the informal practices that it entails,
which have persisted and kept the state from fully developing.
Bradford 8