Munich Personal RePEc Archive

Finance and Income Inequality in Kazakhstan: Evidence since Transition with Policy Suggestions

Shahbaz, Muhammad and Bhattacharya, Mita and Mahalik, Mantu Kumar (2017): Finance and Income Inequality in Kazakhstan: Evidence since Transition with Policy Suggestions.

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Abstract

Kazakhstan gained independence in 1990 and has undergone significant changes in economic, social and trade conditions since then. We analyse the effects of financial development on income inequality in Kazakhstan, incorporating economic growth, foreign investment, education and the role of democracy as the drivers. We establish that income inequality in Kazakhstan is impaired by financial development. In summary, we send the three messages for policy purposes. First, strengthening financial sector is necessary to close the gap between ‘haves and have-nots’. Second, attracting foreign direct investment beyond the hydrocarbon sector is necessary to alleviate inequality. Finally, adaptation of education system to the new social and economic environment would help in improving income distribution.

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