Oil revenues, FDI and balance of payment dynamics: The case of Kazakhstan between the supercycle commodity boom and financial subordination

Alongside an increased privatization and liberalization process, since 1995 the economy of Kazakhstan experienced a golden period of growth. Together with macroeconomic stability, the country attracted enormous resources from the rest of the world through financial account, mainly in terms of Foreign Direct Investment (FDI) in the oil sector. We show how, thanks to the 2003–2014 supercycle oil and commodity boom, Kazakhstan was able to count on an extraordinary level of goods and trade balance but, despite that, registered almost persistent current account deficits that reinforced its need for financial inflows. Our work investigates the sustainability of Kazakhstan’s development strategy based on primary goods export, fossil fuel in particular, and on external financial inflow reliance through the study of its balance of payments, its international investment position statistics and through the ownership of Kazakhstan’s main resources. The study of Kazakhstan’s current economic and geopolitical opportunities and risks is particularly relevant since the country finds itself at the heart of a complex game of pressure and equilibriums exactly among the major economic (and military) superpowers as China, Russia, the United States and Europe.